United States Representative Tom Emmer criticized Securities and Exchange Commission Chair Gary Gensler during a congressional hearing, labeling him the most “destructive” and “lawless” chair in the regulator’s 90-year history.
“You’ve made up the term crypto asset security. This term is nowhere to be found in statute; you made it up [and] you never provided any interpretive guidance on how crypto asset security might be defined within the walls of your SEC,” Emmer stated before the House Financial Services Committee on Sept. 24.
He argued that this term formed the foundation of Gensler’s “enforcement crusade” against the crypto industry over the past three years, until SEC lawyers retracted it in a court footnote last week.
“Your inconsistencies on this issue have set this country back. We could not have had a more historically destructive or lawless chairman of the SEC,” Emmer said.
Emmer also questioned Gensler about the SEC’s handling of the Debt Box case, where the SEC sued a crypto startup for an alleged $50 million fraud scheme.
The case was dismissed on May 28, and the SEC was ordered to pay $1.8 million in fees.
Gensler, responding to Emmer’s inquiries, acknowledged that the matters in the Debt Box case were “not well handled.”
SEC Commissioner Hester Peirce also criticized Gensler, stating the SEC should have retracted the term crypto asset security much earlier.
“[By] tucking into a footnote, we admit that now actually the token itself is not a security. That’s something that we should have admitted long ago,” Peirce said.
She added, “We’ve fallen on our duty as a regulator not to be precise.”
When asked about the need for a statutory definition for crypto tokens, Peirce indicated that while it’s helpful for Congress to weigh in, the SEC could provide guidelines it has chosen not to.
Despite calls to rescind the SEC’s Staff Accounting Bulletin No. 121 rule, Gensler confirmed it would remain in effect, stating, “No, it’s a good accounting bulletin.”
He claimed it helps public companies understand the risks associated with holding crypto, citing recent bankruptcies.
Representative Wiley Nickel countered that SAB 121 actually makes the digital asset ecosystem “less safe.”
Nickel criticized the SEC for exempting Bank of New York Mellon from the reporting requirement, arguing it leads to “different rules for different folks.”
