Today, the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, led by Chairman French Hill (AR-02), is holding a hearing entitled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.”
Chairman Hill opened the session with remarks highlighting his concerns about the Securities and Exchange Commission's (SEC) handling of digital assets under Chairman Gary Gensler.
Hill stated, “Welcome to this important bookend to our digital asset work for this Congress in the 118th session of the Congress. I’ve been privileged to lead the Digital Asset Subcommittee, which was established only last year but has already made history legislatively with the Clarity for Payment Stablecoins Act and our fit for purpose regulatory framework bill, FIT21.”
He expressed disappointment that despite legislative progress on a bipartisan basis, "the SEC as chaired by Chairman Gensler has instead chosen to front-end the work of Congress and insert politics instead of being an independent regulator."
Hill criticized Gensler's actions regarding FIT21, noting that "he even took the unusual step of releasing his own statement opposing FIT21 on the morning of the House vote," while contrasting this with "the Biden White House, which did not issue a veto statement on that bill." Hill pointed out that over 70 Democrats voted 'Yes' on FIT21 hours later.
Hill emphasized that "the Commission has a statutory mandate to protect investors; maintain fair, orderly and efficient markets; and facilitate capital formation." He argued that instead of providing legal clarity, "the Gensler SEC’s approach has injected even more confusion and uncertainty into the markets."
He further criticized what he described as politicized enforcement actions by the SEC. “Whether it’s through politicized enforcement actions or by refusing to share its analysis around the legal classification of digital assets, the SEC has created a ‘lose-lose-lose’ situation for consumers, founders, investors, and everyone in between,” he said.
Hill also mentioned issues related to enforcement cases pursued by the agency against companies for activities not clearly defined as securities violations. He noted that proposed rulemakings and guidance from the SEC have often been overly broad or difficult to implement for digital asset market participants.
“At best, these rules fail to provide any clarity on how to comply with law while imposing significant compliance burdens on digital asset firms,” Hill remarked. “At worst, they represent a de facto ban on use of digital assets and blockchain technology in United States.”
Highlighting Staff Accounting Bulletin 121 as an example of prejudice against digital assets at SEC under Gensler's leadership, Hill explained it creates hurdles for financial institutions seeking to provide digital asset custody services.
Hill suggested such an approach has driven many in blockchain community out of U.S., noting one report estimating loss around 14% blockchain developers since 2018.
On recent developments like approval Exchange Traded Products Bitcoin Ether earlier year after court challenges faced by SEC explained why Bitcoin futures ETFs approved but spot Bitcoin products were not: “While positive development took countless hours manpower millions dollars legal fees full face plant D.C Court Appeals achieve.”
In conclusion reiterated pro-FIT21 pro-regulatory framework views majority bipartisan support does not mean opposition modernizing existing rules incorporating digital asset securities unique instruments: “We’re against SEC enforcement abuse making hard legitimate actors follow rules fine job bring innovation technology markets.”
“I want thank witnesses being us today look forward testimonies,” he concluded.