SEC Chair Gensler Accused of Misleading Congress on Ethereum's Classification

By: Eliza Bennet

Chairman of the House Financial Services Committee, Patrick McHenry has accused SEC Chair, Gary Gensler of misleading Congress on the classification of Ethereum during his testimony in April 2023. The accusations arise amidst increasing tensions over the regulatory treatment of digital assets recently, with multiple industry participants filing lawsuits against the SEC for exceeding their authority.

In a statement released in late April, McHenry pointed out that recent court records suggest Gensler purposely evaded queries from the committee about whether the SEC perceives ETH as a security. These allegations raise serious questions about SEC's transparency and consistency, especially since they contradict the SEC's and Gensler's earlier declarations.

The Financial Services Committee claims this incident illustrates a wider trend of 'arbitrary and capricious' regulation by the SEC under Gensler's supervision. The SEC's regulation approach allegedly hinders innovation and leaves American consumers unprotected, potentially even posing threats to national security.

The committee, therefore, is campaigning for the bipartisan 'FIT for the 21st Century Act' which aims to clearly delineate a regulatory framework for digital asset markets, thereby providing comprehensive consumer protection. The recent controversy is expected to ignite further debates around digital asset regulation and the role of government oversight in facilitating innovation whilst ensuring market stability and consumer safety.