Gary Gensler’s Congressional Testimony: 5 Notable Moments of Evasion

Facing a contentious Congressional hearing, Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), endured a barrage of criticism and questioning related to his agency’s regulatory stance on various issues, from Bitcoin to the unexpected topic of Pokemon cards. Here are some key moments from the hearing:

“You are the Tonya Harding of securities regulations.” Representative Andy Barr drew a colorful analogy, accusing Gensler of hindering U.S. capital markets with excessive regulatory measures. Barr’s reference to Tonya Harding alluded to the scandal in which the ice skater hired someone to attack her rival, Nancy Kerrigan, leading to Kerrigan’s withdrawal from a competition.

“I wish the Biden administration would say, ‘You’re fired.'” Representative Warren Davidson expressed his hope that the Biden administration would dismiss Gensler, claiming that he was promoting a “woke” political and social agenda and abusing his position as SEC Chair. Davidson suggested that the SEC Stabilization Act he introduced could facilitate Gensler’s removal.

Gensler reiterates Bitcoin isn’t a security Chair Patrick McHenry questioned Gensler about whether Bitcoin should be classified as a security. Gensler, after some reluctance, asserted that Bitcoin did not meet the criteria of the Howey test, suggesting it is not a security. When McHenry raised the possibility of Bitcoin being a commodity, Gensler avoided a direct response, citing the scope of U.S. securities laws.

Are Pokemon trading cards securities? It depends. Representative Ritchie Torres challenged Gensler’s interpretation of investment contracts by asking whether purchasing a physical Pokemon trading card could be considered a securities transaction. Gensler responded with uncertainty and stated that it depended on the context. Torres then inquired about tokenized Pokemon cards bought through a digital exchange, to which Gensler responded that he would need more information to determine if it constituted a securities transaction. He explained that the core of the Howey test involved the public’s anticipation of profits from the efforts of others.

A sign of defiance Observers noted the presence of a Coinbase “Stand With Crypto” logo behind Gensler during the hearing. This logo represents a 14-month-long campaign led by Coinbase, advocating for cryptocurrency legislation in the United States. Coinbase also organized a “Stand with Crypto Day” in Washington, D.C. on September 27 to promote cryptocurrency innovation and policy improvements.

Gensler’s appearance before Congress showcased the mounting tensions and concerns surrounding regulatory actions in the cryptocurrency and financial markets. The hearing touched on a wide range of topics, from Bitcoin’s classification to the unexpected question of whether Pokemon cards could be considered securities, highlighting the complex challenges facing the SEC in its oversight role.

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