SEC’s Gensler Going Rogue in Solo Quest to Stop U.S. Crypto Legislation?

The
White
House
is
“eager”
to
work
on
a
crypto
bill.
That
was
the
sentiment
of
its
latest
statement
on
Wednesday,
putting
the
administration
on-the-record
again
about
wanting
new
digital
assets
policies
to
protect
investors.

But
U.S.
Securities
and
Exchange
Commission
(SEC)
Chair
Gary
Gensler
–
the
securities
watchdog
President
Joe
Biden
hired
as
a
member
of
his
transition
team
and
a
key
regulator
–
says
don’t
bother.
Gensler’s

strong
view
that
existing
laws
give
his
agency
plenty
of
authority
seems
to
go
against
other
U.S.
regulatory
agencies,
the
White
House
and
its
Treasury
Department.

Gensler,
in
a
statement
he
issued
against
the
Financial
Innovation
and
Technology
for
the
21st
Century
Act
(FIT21)
on
Wednesday
–
as
the
bill
heads
toward
a
vote
that’s
expected
to
count
a

significant
number
of
Democratic
supporters
–
accused
crypto
firms
again
of
showing
“their
unwillingness
to
comply
with
applicable
laws
and
regulations
for
more
than
a
decade,
variously
arguing
that
the
laws
do
not
apply
to
them
or
that
a
new
set
of
rules
should
be
created
and
retroactively
applied
to
them
to
excuse
their
past
conduct.”

“The
crypto
industry’s
record
of
failures,
frauds,
and
bankruptcies
is
not
because
we
don’t
have
rules
or
because
the
rules
are
unclear,”
Gensler
argued.
“It’s
because
many
players
in
the
crypto
industry
don’t
play
by
the
rules.”

Biden’s
White
House
may
not
like
FIT21
either,
but
a

policy
statement
the
same
morning
said
the
administration
is
“eager
to
work
with
Congress
to
ensure
a
comprehensive
and
balanced
regulatory
framework
for
digital
assets,
building
on
existing
authorities.”

Rep.
French
Hill
(R-Ark.)
said
in
a
CoinDesk
TV
interview
on
Wednesday
that
many
House
Democrats
“recognize
that
the
existing
Securities
and
Exchange
Commission
rules
are
inadequate.”
Hill
added
that
FIT21
is
trying
to
give
Gensler’s
agency
a
roadmap
for
handling
this
sector.

“I
cannot
explain
why
he’s
taken
the
position
that
he
had,”
Hill
said.
“I
think
he’s
isolated
from
other
regulatory
leaders.”

The
SEC
didn’t
immediately
respond
to
a
request
Wednesday
to
comment
on
whether
Gensler
sees
himself
at
odds
with
fellow
government
officials.

The
SEC’s
sister
agency
in
policing
the
U.S.
markets,
the
Commodity
Futures
and
Trading
Commission
(CFTC),
has
taken
a

strong
pro-legislation
position,
arguing
that
existing
law
leaves
a
hole
in
oversight
of
the
crypto
spot
markets
for
non-securities,
such
as
bitcoin

(BTC).
CFTC
Chairman
Rostin
Behnam
has
told
lawmakers
that
“Congress
needs
to
act”
on
crypto
legislation,
and
he’s
said
that
if
FIT21
passes,
his
agency
can
build
a
regulatory
framework
within
12
months.
A
CFTC
spokesperson
told
CoinDesk
on
Tuesday
that
the
agency
would
not
comment
on
the
bill.

Consumer-protection
groups
seem
to
be
in
Gensler’s
corner
on
this,
and
Mark
Hays,
a
senior
policy
analyst
for
Americans
for
Financial
Reform
and
Demand
Progress,
dismissed
the
apparent
contrasts
among
different
corners
of
the
federal
government.

“It
reflects
slightly
different
takes
on
what’s
important
and
the
‘art’
of
what’s
possible
in
politics,”
he
told
CoinDesk
in
an
email.
The
regulators
“all
have
different
tools
to
address
crypto
regulation
matters.
Some
of
them
have
exercised
that
role
effectively;
others
could
do
more.”

The
spot-markets
gap
could
be
filled
by
separate
legislation
naming
the
SEC
its
regulator,
said
Hays,
who
argued
that
in
matters
of
investor
protection
the
SEC’s
view
should
get
some
deference,
despite
the
CFTC
“playing
the
spoiler.”
His
groups
are
among
dozens
of

organizations
opposing
FIT21
on
consumer-protection
grounds.

The
federal
courts
–
despite
Gensler’s
contention
that
judges
have
agreed
with
his
agency
“time
and
again”
on
crypto
matters
–
haven’t
yet
provided
consistent
answers
on
whether
tokens
should
be
treated
as
securities,
and
the
final
say
may
still
need
to
come
from
the
U.S.
Supreme
Court.
So,
it’s
a
race
between
Congress
and
the
courts
on
who
will
define
how
tokens
such
as
bitcoin,
Ethereum’s
ether

(ETH),
tether

(USDT)
and
solana

(SOL)
should
be
handled
in
the
U.S.

Among
other
government
voices
clamoring
for
crypto
legislation,
Treasury
Secretary
Janet
Yellen
said
earlier
this
year
that
“Congress
should
pass
legislation
to
provide
for
the
regulation
of
stablecoins
and
of
the
spot
market
for
crypto-assets
that
are
not
securities.”
The
Treasury
interest
in
the
spot
markets
and
illicit
finance
doesn’t
leave
a
clear
picture
yet
on
exactly
what
the
administration’s
financial
arm
would
be
interested
in
for
crypto
oversight,
though
the
White
House
has
certainly
indicated
that
FIT21
isn’t
it.

But
whether
the
government
likes
it
or
not,
that’s
the
first
crypto
bill
that
will
receive
a
vote
in
one
of
the
chambers
of
Congress,
leaving
it
as
the
most
prominent
piece
of
digital
assets
legislation
in
the
conversation.

“We’re
disappointed
that
Chairman
Gensler
doesn’t
see
that
this
is
better
than
current
law
and
gives
him
the
tools,
ability,
and
a
process
that
can
allow
him
to
be
a
better
regulator
and
a
better
supervisor
in
this
space,”
Hill
said.

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