House Financial Service Committee Chair Patrick McHenry accused United States Securities and Exchange Commission (SEC) Chair Gary Gensler of providing misleading information to Congress regarding the classification of Ethereum (ETH). McHenry’s statement was made on X, calling out Gensler for his testimony to the Financial Services Committee the previous April.
Allegations and Revelation
- McHenry alleged that Gensler had “knowingly misled Congress” on the status of Ethereum, referencing court documents filed by Consensys Software Inc. that indicated the SEC’s belief that ETH was a security for over a year.
- The unredacted filing revealed an investigation launched by the SEC Director of Enforcement, Gurbir S. Grewal, in March of the previous year regarding the potential classification of certain securities, including ETH.
“New court filings show this was an intentional attempt to misrepresent the Commission’s position,” McHenry stated. “Classifying Ether as a security contradicts previous statements of the SEC and Chair Gensler – yet another example of the arbitrary and capricious nature of the agency’s regulation by enforcement approach to digital assets.”
Crypto community members on X expressed frustration over the lack of action from Congress in response to the SEC’s handling of cryptocurrency regulation. One user commented on McHenry’s statement, suggesting Gensler may face consequences for his actions.
“Good work! I’m sure Gensler is shaking in his boots knowing another strongly worded letter may be coming his way,”
“Words, words, words, when will Gary be held accountable for my (our) losses,”
Regulatory Challenges and Policy Proposals
- The SEC’s strict approach to crypto regulation has faced criticism, with recent actions against Consensys raising concerns in the industry.
- Consensys responded with litigation, challenging the SEC’s jurisdiction over Ethereum and denouncing the proposed classification as a security.
- McHenry leveraged the situation to advocate for the Financial Innovation for Technology for the 21st Century Act (FIT21), a regulatory framework introduced by House Republicans to address crypto industry regulations.
