On September 18, U.S. lawmakers will host a hearing examining the Securities and Exchange Commission’s (SEC) regulatory approach toward the crypto industry, featuring testimony from former SEC officials and key figures in the digital asset sector. The hearing, titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets,” will be held by the House Subcommittee on Digital Assets, Financial Technology, and Inclusion.
Criticism of SEC’s Enforcement Approach
Former SEC Commissioner Dan Gallagher and Michael Liftik, who previously held multiple roles at the SEC, including acting enforcement chief, are expected to provide their insights into how the SEC’s current leadership is addressing cryptocurrency regulation. The subcommittee leadership has pointed out that under SEC Chair Gary Gensler, the commission has allegedly pursued an enforcement agenda that harms the U.S. digital asset ecosystem. They cite Gensler’s use of the Howey test to classify digital assets as securities and note that there are discrepancies in how these rules are applied across the SEC.
Witnesses and Key Testimonies
In addition to Gallagher and Liftik, several industry leaders will testify, including:
- Teddy Fusaro, President of Bitwise Asset Management
- Lee Reiners, a lecturing fellow at Duke University
- Jennifer Schulp, Director of Financial Regulation Studies at the Cato Institute’s Center for Monetary and Financial Alternatives
Schulp’s written testimony criticizes Gensler’s handling of crypto regulation, arguing that it essentially amounts to a ban on crypto activity in the U.S. She highlights Gensler’s claim of authority over nearly all digital assets except Bitcoin and points out the regulatory uncertainty surrounding Ether (ETH). Schulp explained that while the Commodity Futures Trading Commission (CFTC) classifies Ether as a commodity, the SEC has not provided clear guidance on whether it views Ether as a security. This leaves Ethereum—the second-largest blockchain network—stuck in regulatory limbo.
Political Allegations Against the SEC
The hearing also follows a letter from House Republicans accusing the SEC of politically biased hiring practices. They argue that under the Biden administration, which appointed Gensler in 2021, the SEC has increasingly made decisions that reflect political affiliations rather than sound regulatory principles.
Broader Implications for the Crypto Industry
This hearing adds to the growing concerns within the crypto community regarding the SEC’s approach under Gensler. The SEC’s recent actions—including lawsuits and enforcement against several crypto projects—have prompted calls for clearer regulations. Many in the industry argue that without a more transparent and consistent framework, innovation could be stifled, pushing crypto businesses to operate outside of the U.S.
