Ex-SEC officials to speak at hearing on ‘politicized approach’ to crypto

Two former staff members from the United States Securities and Exchange Commission (SEC) will testify at a Sept. 18 hearing on the politicization of crypto regulation.

In a Sept. 13 notice, the US House Subcommittee on Digital Assets, Financial Technology and Inclusion said they would hold a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.” The witnesses at the Sept. 18 hearing will include former SEC commissioner Dan Gallagher and Michael Liftik, who worked as an attorney, senior adviser, or acting enforcement chief during his roughly ten years at the commission. 

The subcommittee leadership claimed that SEC Gary Gensler had “prioritized and pursued an enforcement and regulatory agenda to the detriment of the digital asset ecosystem” during his time at the commission. They cited inconsistencies with Gensler’s position on digital assets as securities under the Howey test and disagreements among commissioners.

Related: US lawmakers divided in first Congressional hearing on DeFi

Bitwise President Teddy Fusaro, Duke University lecturing fellow Lee Reiners, and Jennifer Schulp, the director of financial regulation studies at the Center for Monetary and Financial Alternatives, will also testify at the hearing. In her written testimony, Schulp claimed that the SEC’s approach under Gensler “effectively amounts to a ban on crypto activity within the United States.”

“[…] Gensler has laid jurisdictional claim to essentially all digital assets except for Bitcoin,” said Schulp. “He has repeatedly refused to provide guidance as to whether Ether can be considered a security—a position made all the more confusing by the fact that the Commodity Futures Trading Commission has deemed Ether a commodity— leaving the second largest blockchain in regulatory limbo with ongoing questions about whether the SEC will or will not assert jurisdiction.”

The hearing announcement followed a letter by House Republicans alleging that the SEC was hiring staff based on political affiliation. US President Joe Biden, a Democrat, nominated Gensler as head of the agency after taking office in 2021. 

‘Come in and talk to us’?

During Gensler’s more than three years leading the commission, the SEC has taken several enforcement actions against crypto firms allegedly offering or selling tokens as unregistered securities. As of Sept. 10, the commission had imposed roughly $4.7 billion in cases against crypto firms and their executives in 2024.

Though the SEC chair’s term will run through 2026, many are calling on the next US President to ask Gensler to resign once they take office in January 2025. Republican Donald Trump said he intended to fire Gensler “on day one” if reelected, while many Democratic donors are pushing for Kamala Harris to do the same.

Magazine: Godzilla vs. Kong: SEC faces fierce battle against crypto’s legal firepower