SEC Head Gensler Under Pressure from House Committee Chairs and Blockchain Association

Chairs of Three Committees Request Satisfactory Response from SEC Chair Gary Gensler

The chairs of three committees in the United States House of Representatives have sent a letter to SEC chair Gary Gensler, asking for a more satisfactory response to their letter from November 1st regarding the SEC chairman’s and the agency’s compliance with recordkeeping requirements.

The chairs of the Judiciary, Oversight, and Financial Services Committees – Jim Jordan, James Comer, and Patrick McHenry respectively – declared that the response they received from SEC Chairman Gensler to their inquiry did not answer the direct questions they had posed in their letter. Specifically, they had requested assurance that the SEC adheres to federal recordkeeping and transparency regulations, that Gensler and his staff have not employed private emails for official purposes, as well as elucidations of the SEC’s definition and utilization of “off-channel communication”.

The congressmen, including Representative Tom Emmer, reacted to a Wall Street Journal study that castigated the SEC and other organizations for inadequate recordkeeping. The report stated, “Government officials often do the same kind of record-keeping that Wall Street groups were recently penalized [by the SEC] for.” It especially highlighted the use of chats by officials for government matters, which are not examined to satisfy subsequent Freedom of Information Act (FOIA) requests.

The letter of June 28th reiterated the original requests and further stated, “If you do not plan to fulfill any or all of the requests numbered 1-5, please explain the factual and legal grounds for your refusal to do so.” It cited discrepancies in Gensler’s publicly available meeting agendas for 2021, mentioning crypto.

Coinbase has requested the dismissal of the SEC’s lawsuit, alleging an extraordinary misuse of process.

Blockchain Association Criticizes Gensler for Expressing Opinion on Crypto Regulation

The day after, Gensler was the target of particularly crypto-related criticism when the Blockchain Association published a paper suggesting that he should abstain from making decisions concerning digital asset enforcement. The paper stated:

Gensler has explicitly expressed his opinion that all digital assets aside from Bitcoin (BTC) are unregistered securities and all digital asset trading platforms are unregistered securities exchanges, the paper noted, citing numerous remarks made by the SEC chairman. These statements demonstrate that Gensler has already formed an opinion on “everything other than bitcoin,” it further stated.

Recipients of Wells notices can attempt to have Gensler recused from the matter either through the SEC or in federal court, the paper noted.

Does SEC Chair Gary Gensler have the ultimate authority when it comes to crypto regulation?