The U.S. Securities and Exchange Commission (SEC) is facing a major hearing as all five SEC commissioners will testify before Congress for the first time since 2019. The development comes as SEC Chairman Gary Gensler faces criticism in an investigation into political bias.

Gensler’s criticism of his overly aggressive approach to digital asset regulation is fueling concerns that it could stifle innovation in the U.S. cryptocurrency sector. With the November election looming, Gensler’s leadership is at great risk.

SEC to Testify Before Congress

Fox Business' Eleanor Terrett reports that next Tuesday, all five SEC members will testify before the House Financial Services Committee. This will be the first time the entire committee and the SEC chairman have testified together since 2019. SEC Commissioner Gary Gensler will testify before the Senate on September 25.

The hearing comes as Gensler struggles to maintain his leadership position. Last week, Gensler was investigated by Republican lawmakers Jim Jordan, Patrick McHenry and James Comer for alleged political bias.

Criticism of Gensler's enforcement actions

The investigation is looking into whether Gensler or the SEC favored certain political parties in allocating key positions at the agency, potentially violating the Civil Service Reform Act of 1978. Republican lawmakers are leading the probe to determine whether Gensler violated ethics standards in his hiring.

The Subcommittee on Digital Assets, Financial Technology, and Inclusion’s September 18 hearing will also examine the SEC’s handling of digital assets under Chairman Gary Gensler. Witnesses Michael Liftik, Dan Gallagher, Teddy Fusaro, Jennifer Schulp, and Lee Reiners will discuss the negative effects of the SEC’s overreliance on enforcement in the digital asset industry. They will also address regulatory ambiguity, including the application of the Howey Test to digital assets.

During a hearing before the House Financial Services Committee, Jennifer Schulp of the Cato Institute criticized the SEC’s “politicized” approach to digital assets under Gensler’s leadership. Schulp argued that the SEC prioritized enforcement without clear rules, exposing digital asset market participants to high compliance and regulatory risks.

The outcome of the 2024 U.S. election is increasingly important to Gensler. According to a Bloomberg report, donors linked to Vice President Kamala Harris are quietly lobbying to remove Gensler. The cryptocurrency community has also publicly expressed frustration with Gensler’s enforcement practices in the space.


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