5 Lowlights of Gary Gensler’s Secret Testimony Before Congress
Blamed for the “knee-jerk” capital markets in the United States and evading questions around Bitcoin (BTC) and Pokémon cards, the chairman of the Securities and Exchange Commission, Gary Gensler, seems to have one hell of a fight with Congress this week.
On September 27, the head of the US SEC found himself before lawmakers again in a hearing scheduled to discuss the agency's market oversight.
Here are some of the highlights and highlights of the session.
You are Tonya Harding's Safety Rules.
One of the most colorful examples comes from U.S. Representative Andy Barr, who accused Gensler of “crushing” U.S. capital markets with red tape.
Barr cited Gensler's old testimony, Gensler argued that America is the largest, most sophisticated and innovative capital market in the world, and that “even gold medalists need to keep training,” and that it shouldn't be taken for granted.
“With all due respect, Mr. Chairman, if there is a gold medal for US capital markets, you are Tonya Harding's safety regulations,” Barr said.
“You are bringing the US capital market to its knees with the red tape from your commission.”
Barr may refer to the 1994 U.S. Figure Skating Championships and Winter Olympics lead-up to the scandal in which U.S. figure skater Tonya Harding hired a hitman to attack rival Nancy Kerrigan. Kerrigan's non-compete at the US Championships is over.
Mr. Barr to Gensler:
“If you're the gold medalist of US capital markets, you're Tonya Harding's safety net because you brought US capital markets to their knees…”
pic.twitter.com/D9VOxtXAGC
— John Dickens (@johnLdickens) September 27, 2023
“I wish the Biden administration would say ‘you're fired.'”
Meanwhile, Rep. Warren Davidson tore into Gensler, saying he hopes the Biden administration fires him.
“I wish the Biden administration would say ‘you're fired,'” Davidson said.
Davidson accused Gensler of pushing an “activist” political and social agenda and abusing his role as SEC chairman.
Gary Gensler's tenure at the SEC highlights two key problems.
1) @GaryGensler problem 2) @SECGov structural problem
That's why I introduced the SEC Stabilization Act to #FireGaryGensler and restructure the SEC. pic.twitter.com/Ud3giejKfZ
— Warren Davidson (@WarrenDavidson) September 27, 2023
The U.S. representative added that he hopes the SEC stabilization legislation, which he introduced with fellow representative Tom Emmer, will do.
“You are presenting the issue of this draft [the SEC Stabilization Act] They are acting like the chairman every day,” he said.
Gensler was not given an opportunity to respond.
Gensler reiterated that Bitcoin is not a security.
When asked whether Bitcoin is a security, Patrick McHenry, the chairman of the US House of Financial Services, eventually relented, saying that Bitcoin did not meet the Hawaii test.
“It doesn't meet the Hawaii test, which is the law of the land,” Gensler said, suggesting that bitcoin is not a security.
McHenry then suggested that bitcoin should be a commodity, which Gensler declined to answer, saying the challenge was outside the scope of US securities laws.
Gary Gensler says #Bitcoin is not a security, but refuses to call it a commodity.
Time is running out. When a powerhouse like Blackrock asks for a Bitcoin ETF, you have to deliver. pic.twitter.com/yhKcMzfzx6
— The ₿itcoin Therapist (@TheBTCTherapist) September 27, 2023
Henry also alleged that Gensler tried to “suppress the digital asset ecosystem” and that the SEC refused to come clean with Congress about its relationship with FTX and former CEO Sam Bankman-Fried.
Gensler was also not given an opportunity to respond to the claims made by McHenry.
Are Pokemon Trading Cards Warranties? It depends.
Rep. Richie Torres took the time to question Gensler on his interpretation of what an investment contract is.
Torres challenged Gensler by asking whether buying a physical Pokémon trading card was a securities transaction.
I asked @SECGov Chairman Gary Gensler about the term ‘investment contract', which is key to defining jurisdiction over crypto.
Gensler struggled to answer the basic questions of whether an investment contract needed a contract. His evasion is deafening and terrifying. pic.twitter.com/EJcZEHiKGL
– Representative. Ritchie Torres (@RepRitchie) September 27, 2023
“Let's say I was going to buy a Pokemon card. Is doing so a security transaction?
Gensler responded – “I don't know what the context is” – before finally concluding that it wouldn't be safe if bought in a store. Then Torres asked.
“If I buy a token Pokemon card on a digital exchange via blockchain, is that a security transaction?”
“I need to know more,” Gensler replied.
Related: Coinbase crypto lobbying campaign to focus on 4 swing states
Gensler then explained that it's time for the invested public to estimate profits based on other efforts—this is the key to Hawaii's challenge. Torres called Gensler's “evasion” “disturbing and reprehensible.”
A sign of resistance
Meanwhile, amid the back-and-forth cross-examination between Gensler and representatives, eagle-eyed observers noticed Coinbase's “Stand With Crypto” logo behind the SEC chair.
BREAKING: Coinbase Stands With Crypto Logo Appearing At Gary Gensler's Hearing pic.twitter.com/IAwqyDEQea
— Miss Teen Crypto (@missteencrypto) September 27, 2023
The Coinbase-led initiative is a 14-month campaign that began in August. It aims to legislate cryptocurrency in the United States.
Coinbase held “Stand with Crypto Day” on September 27 in Washington, DC to advocate for better cryptocurrency innovation and policy.
Magazine: Binance, Coinbase Heads to Court, and SEC Names 67 Crypto Securities: Hodler's Digest, June 4–10.
