According to Blockworks, US House Financial Services Committee members questioned leaders of the Securities and Exchange Commission (SEC) on Tuesday, seeking explanations about the agency’s agenda and rulemaking practices, particularly concerning digital assets. The hearing, titled “Oversight of the Securities and Exchange Commission,” marked the first time since 2019 that all five SEC commissioners appeared together before the Committee. SEC Chair Gary Gensler was joined by Commissioners Caroline Crenshaw, Jaime Lizárraga, Hester Peirce, and Mark Uyeda.
Committee Chair Patrick McHenry, R-N.C., criticized Gensler, stating that his legacy would be defined by transforming the SEC into a rogue agency. Gensler clarified that the commissioners, although appearing together, do not represent the agency's collective opinions. When asked about the status of crypto tokens as securities, Gensler reiterated that the agency uses the Howey test to determine if an asset class is being offered to the public.
Other Committee members were less focused on the SEC’s dealings with crypto, suggesting that the notion of creating specific digital asset regulations might be unnecessary. Rep. Brad Sherman, D-Cali., mentioned that while clarity could be provided, an additional statute to clarify that crypto is a security might not be needed. Commissioners Peirce and Uyeda, known for their pro-crypto stance, often issue dissenting opinions on blockchain-related enforcement actions. Peirce criticized the SEC’s “regulation by enforcement” strategy, calling it inefficient and unclear.
Peirce and Uyeda recently co-authored an opinion disagreeing with the SEC’s action against Flyfish Club, a private social club in Manhattan that launched an NFT project to sell memberships in 2021 and 2022. The SEC claimed Flyfish violated securities laws by leading NFT investors to expect profits. Peirce and Uyeda likened the SEC’s approach to a Japanese dining experience, Omakase, where the directive “I’ll leave it up to you” can be disastrous in the hands of a crypto-obsessed commission.
