Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), yesterday was grilled by the Senate Banking Committee on a wide array of topics, including artificial intelligence and cryptocurrency regulation. In his prepared statement, Gensler reiterated his belief that the SEC should oversee the crypto market. However, he avoided giving a direct response when asked about approvals for cryptocurrency spot exchange-traded funds (ETFs).
Letโs analyze what his speech meant for crypto.ย
Eleanor Terrettโs Key Takeaways From the Hearing
Terrett, in her post-analysis of the hearing, highlighted some takeaways. Notably, cryptocurrency, which got attention previously, was downplayed this time. Lawmakers from both the House and the Senate exchanged thoughts on the pace at which Gensler was formulating regulations and the duration of comment periods.
Surprisingly, Artificial Intelligence (AI) has gained all the light during the hearing, indicating a shift in focus. Furthermore, the hearing highlighted an increased level of political polarization, which could add complexity to regulatory decisions in the crypto space.
No Clarity on Spot Bitcoin ETFs
But it all revolved around the lack of clarity regarding Bitcoin ETF approvals. When questioned about this by Senator Hagerty, Gensler merely stated that there are multiple spot ETF filings, including those beyond Grayscale, under review. His response left room for interpretation, as he expressed anticipation for the Staffโs recommendation.
On this, Eric Balchunas, a senior ETF analyst at Bloomberg, pointed out that Genslerโs response seemed to be hedging, and it lacked a direct answer to the senatorโs query. He noted that Gensler referred to the existence of multiple filings beyond Grayscale, providing little clarity on the subject. Itโs uncertain whether the crypto market, particularly Bitcoinโs price, will react to Genslerโs remarks.
Panel Slammed Genslerโs Regulatory Hangouts
However, Senator Lummis, a supporter of digital assets, questioned Gensler about an SEC guideline. It suggests companies should list crypto on their balance sheets if they handle it for customers. Lummis worried this might push banks out of crypto custody.
In response, Gensler clarified the SECโs stance, noting crypto differs from regular securities, making it harder to separate. He stressed that how banks handle capital in this context is a matter for bank regulators, not the SEC.
It is worth noting that, the SEC, led by Gensler, is not only focused on enforcement against crypto platforms like Coinbase and Binance. Theyโve also put forward rule proposals that could bring the digital asset industry in line with current U.S. securities laws.ย