On Sept. 18, the United States House Subcommittee on Digital Assets, Financial Technology, and Inclusion will host a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.” The hearing will feature testimony from two former Securities and Exchange Commission (SEC) officials and industry leaders, aiming to scrutinize the agency’s handling of cryptocurrency regulation under SEC Chair Gary Gensler.
The witnesses will include former SEC Commissioner Dan Gallagher and Michael Liftik, who held various senior roles at the SEC, including acting enforcement chief. Both are expected to discuss the regulatory challenges facing the crypto industry, with a particular focus on what critics describe as the SEC’s inconsistent application of securities laws to digital assets.
The hearing follows growing concerns from lawmakers about Gensler’s approach, which some allege has prioritized aggressive enforcement over clear regulatory guidance. Subcommittee leaders have accused Gensler of politicizing the regulatory process and stifling the growth of the digital asset ecosystem. They pointed to Gensler’s reliance on the Howey test to classify digital assets as securities, an approach that has sparked disagreement among SEC commissioners and industry stakeholders.
Other key witnesses will include Teddy Fusaro, president of Bitwise, Duke University lecturer Lee Reiners, and Jennifer Schulp from the Cato Institute’s Center for Monetary and Financial Alternatives. Schulp, in her written testimony, will argue that the SEC’s stance under Gensler has created significant uncertainty, leaving many digital assets, including Ethereum, in regulatory limbo.
Schulp contends that the SEC’s refusal to clarify whether Ether is considered a security — even as the Commodity Futures Trading Commission deems it a commodity — exacerbates confusion and undermines the industry’s potential for growth. “Gensler has laid jurisdictional claim to essentially all digital assets except for Bitcoin,” Schulp wrote, further highlighting the agency’s enforcement-driven agenda.
This hearing comes amid broader concerns that the SEC’s actions are politically motivated. Some House Republicans have even alleged that the agency’s hiring practices favor staff based on political affiliation. The hearing also follows a period of intensified enforcement, with the SEC imposing approximately $4.7 billion in penalties against crypto firms in 2024 alone.
With the 2024 presidential election on the horizon, many speculate that Gensler’s tenure could be cut short, depending on the outcome. Former President Donald Trump has already pledged to fire Gensler on his first day in office if reelected, while some Democratic donors have suggested that Kamala Harris could take similar action.