The much-anticipated crypto oversight hearing of SEC Chair Gary Gensler before Congress is drawing intense attention from both Capitol Hill and the digital assets industry. The agency commissioners and Gensler will testify before the Financial Services GOP on Tuesday, September 24. Thereafter, they will testify in front of the Senate Banking and Housing Democrats on Wednesday.
What to Expect from SEC Crypto Oversight Hearing?
Ron Hammond, Director of Government Relations at the Blockchain Association, highlighted the significance of the event in a series of posts on X. Moreover, he discussed what sets this year’s hearing apart from previous “quieter” hearings and how it could impact the future of cryptocurrency regulation in the U.S.
Hammond pointed out that while Gensler regularly testifies before Congressional committees, this year’s hearing is different due to heightened scrutiny, even from Gensler’s own party. “Gensler’s tactics at the agency on a multitude of fronts have found him subject to fairly intense scrutiny from his own party,” Hammond noted. In addition, he referred to concerns about the SEC’s treatment of its staff and its enforcement division’s direction.
He added that Gensler, who has traditionally been backed by Democrats, will find fewer allies this time. This internal dissent, according to Hammond, makes Gensler politically vulnerable as he prepares to defend his record. “Gensler also comes to Congress politically wounded. The courts have dealt the agency various legal setbacks spanning the spectrum,” Hammond said.
These legal defeats include resistance from other regulators and Congressional pushback on specific rulemakings, such as the agency’s controversial SAB 121 rule, which 33 Democratic lawmakers voted to repeal. Furthermore, an unusual aspect of this hearing is that Gensler will be joined by other SEC commissioners.
1) This week in Congress and crypto: This is the week nearly everyone in crypto and Capitol Hill has waited long for: SEC Chair and the other SEC commissioners will testify tomorrow @FinancialCmte and Wednesday @SenateBanking. Usually this is a quieter hearing, but not this year:
— Ron Hammond (@RonwHammond) September 23, 2024
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Hammond described this as “very uncommon,” noting that it could work in Gensler’s favor, as the two Democratic commissioners will likely back his policies. However, Republicans on the panel are expected to counter Gensler’s arguments forcefully.
Among the pressing topics expected to be addressed during the hearing are the SEC’s aggressive stance against the crypto sector, especially given its handling of high-profile fraud cases like FTX and Terra. Despite these enforcement actions, major questions remain, including the legal status of Ethereum (ETH), airdrops, and NFTs, which could be asked to Gensler. “Is ETH a security? What is the legal status of airdrops? Are NFTs securities, and what makes them so?” Hammond asked.
The Election Factor In Play
The broader market implications of the hearing are substantial, as crypto has become a significant issue in U.S. politics. Hammond emphasized that “no one expected crypto to reach this stage of importance in the Presidential election.”
Additionally, Hammond noted that the crypto industry has organized politically, with its political action committee (PAC), Fairshake, becoming the largest in the industry. However, one of the biggest unknowns is what will happen if Vice President Kamala Harris wins the election and keeps Gensler in his position.
“The question remains: is there a pro-crypto future in the US if Harris wins and opts to keep Gensler at the helm?” Hammond asked, leaving the outcome open for debate. The outcome of Gensler’s testimony could shape the future of crypto regulation in the U.S. and have far-reaching consequences for the market.
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In case of actions against the American watchdog, the enforcement policies against the crypto industry could be eased. This is also seen as a bullish scenario for the market as optimism among investors would grow regarding the future of the industry.
Also Read: Ripple’s $125M SEC Fine; A Partial Victory Amid Challenges
