Recently confirmed U.S. Securities and Exchange Commission chair Gary Gensler punted to congress on providing more regulatory oversight to the crypto space, but also said the commission would act within its purview.
In a virtual hearing held by the House Financial Services Committee today, North Carolina Representative Patrick McHenry asked Gensler what the regulatory body would be doing to ensure a “vibrant digital asset marketplace with legitimate money and the rule of law.” McHenry highlighted collaborations across regulatory agencies regarding digital assets and cryptocurrencies.
Gensler said the crypto market could benefit from “greater investor protector” within the Securities and Exchange Commission’s, or SEC’s, current authority around securities and other financial products. He added that he believed only the U.S. Congress had the power to address such regulatory oversight rather than having the commission overreaching its authority under his leadership.
“Right now, the exchanges, trading in these crypto assets, do not have a regulatory framework either at the SEC or our sister agency, the Commodity Futures Trading Commission,” said Gensler. “That could instill great confidence. Right now, there’s not a market regulator around these crypto exchanges, and thus there’s really not protection against fraud or manipulation.”
The hearing today was the third held regarding the controversy over GameStop stock shorts earlier this year. Lawmakers have been exploring allegations of market manipulation from Robinhood and major hedge funds in response to Redditors’ short squeeze of GameStop stock and others. The price of GME has been volatile since peaking at $469.49 on Jan. 28, falling to under $50, and since fluctuating between $100 and $300.
Senate members officially voted on Gensler’s nomination last month, meaning this was his first hearing on the GameStop controversy as SEC chair. During his confirmation hearings with the Senate Banking Committee, Gensler said he supported the SEC excluding Bitcoin (BTC) from its regulatory purview.
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