Gensler: Bitcoin is not a security, but tokenized Pokemon cards may be
House Financial Services Committee members grilled Gensler for almost 5 hours Wednesday
Veronica Winters/Shutterstock modified by Blockworks
During an almost five-hour long hearing, House Financial Services Committee members from both sides of the aisle grilled SEC Chair Gary Gensler on everything from crypto asset classification to his agency’s ambitious agenda.
Gensler appeared on Capitol Hill for a second time this month to face lawmakers’ questions on how he is running the SEC.
“It’s clear that you are working to consolidate your own power even though it means crushing opportunities for everyday Americans and frankly the financial future of this country,” Rep. Tom Emmer, R-Minn., said when addressing Gensler during the hearing.
“Even the federal courts are highlighting the damage you, sir, are doing to our constituents, and they’re telling you that you don’t have the legal authority to accomplish your goal of squashing competition in the financial markets.”
Gensler opted to address digital assets head-on in his opening statement, reiterating a stance he has maintained throughout his entire tenure: Crypto companies are capable of registering compliantly, they simply don’t want to.
“There is nothing about the crypto asset securities markets that suggests that investors and issuers are less deserving of the protections of our securities laws,” Gensler said during his prepared remarks Wednesday. “Congress could have said in 1933 or in 1934 that the securities laws applied only to stocks and bonds. Yet Congress included a long list of 30-plus items in the definition of a security, including the term ‘investment contract.’”
Rep. Ritchie Torres, D-N.Y., who also co-signed a bipartisan letter sent to Gensler Tuesday regarding the agency’s reluctance to approve a bitcoin spot ETF, was one of the Democrats to take a somewhat rare stance against the SEC’s treatment of cryptocurrencies.
Rep. Torres asked Gensler whether or not an ‘investment contract’ requires an actual contract, to which Gensler replied with a quote from former Supreme Court Justice Thurgood Marshall about Congress’ definitions being vague.
“I do not go to MIT, but in the Bronx, if I ask whether any investment contract includes a contract, the answer is typically yes or no,” Torres responded.
When Torres asked Gensler whether purchasing a Pokemon card was a security, the SEC head said no.
“If I were to purchase a tokenized Pokémon card on a digital exchange via a blockchain? Is that a security transaction?” Torres asked.
“I’d have to know more,” Gensler answered.
The hearing comes amid increased bipartisan cooperation on crypto policy in the House. Five crypto-related bills managed to make it through committee markup and have been ordered to a full floor vote, potentially this fall.
The Financial Innovation and Technology (FIT) for the 21st Century Act, co-sponsored by French Hill, R-Ark., Glenn Thompson , R-Penn., and Dusty Johnson, R-S.D. and the Clarity for Payment Stablecoins Act, introduced by Patrick McHenry, R-N.C., have fairly promising bipartisan support in the House.
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