Gary Gensler received grilling from Congressman Warren Davidson on Monday. He cited seven reasons why the SEC chairman should resign.
On Monday, Gary Gensler, Chairman of the Securities and Exchange Committee, appeared before the House Financial Services Committee. And Ohio Republican Rep. Warren Davidson, chairman of the Securities and Exchange Commission (SEC), gave the toughest questioning of the hearing.
Excluding investors from the cryptocurrency market
Davidson, a member of Freedom Caucus, generally favors a lighter regulatory touch for cryptocurrencies. He told Gensler during the committee hearing on Monday:
“The American people want democratic access to capital… You can’t shut retail investors out of the markets and pretend it’s for their own good.”
Follow Congressman Davidson:
“Chief Gensler, your record of failures to protect investors and abuses of power shows we need to restructure the SEC.”
In a prepared statement, Gary Gensler insisted that most tokens are securities and that crypto brokers must register with the SEC. Also, he advocated for securities laws as necessary to protect against fraud and misconduct in the crypto market.
“Calling yourself a DeFi platform, for example, is not an excuse to defy securities laws,” he said. “At the moment, unfortunately, this market is riddled with non-compliance.”
Warren Davidson wants SEC Chairman Gary Gensler out
The Ohio lawmaker recently said he plans to introduce legislation to Congress to remove Gensler. “To correct a long line of abuse, I am introducing legislation that removes the Chairman of the SEC and replaces the position with an CEO who reports to the Board (where the authority resides),” Davidson tweeted on April 16.
Under Davidson’s proposal, the former chairmen of the SEC would not be eligible to take the new position.
Davidson also brought seven specific charges related to Gensler’s time on the Securities and Exchange Commission. The legislator put things firmly at the end of his allotted speaking time.
He explained Gensler’s “Seven Failures”.
- You average over two suggested rules per month.
One of the SEC’s jobs is to propose new rules in the financial markets. These proposals are announced, followed by a comment period where the SEC invites public comment. New rules can completely change markets and change behaviour. The Securities and Exchange Commission submitted 26 new rule proposals in 2022. More than double the number in 2021 and the highest in five years. For politicians skeptical of government oversight, these rule changes can be controversial. You can read the latest proposals here.
- You provide inappropriately short comment periods.
This week, the Gensler Commission reopened the consultation period on the proposed definition of the term “exchange.” The cryptocurrency industry argues that the definition — which threatens to include too much DeFi — is too broad. However, industry members and their representatives will only have 30 days to respond. Many in the industry and Congress think this is too short. Especially for a new and complex industry like cryptocurrency.
- You have unenforceable and illegal authorizations to disclose ESG on the market.
ESG stands for Environment, Social and Governance. They are criteria for evaluating a company’s social and ethical impact. In the past, Davidson said, the SEC’s proposed rules for ESG compliance disclosure lie Outside the jurisdiction of the SEC. He compared ESG compliance with the Chinese Communist Party’s “Social Credit” system. Also, last year, the Securities and Exchange Commission proposed expansion The current system for the detection of ESG.
The head of the SEC is under fire
- You basically have a cryptocurrency “Hotel California” base where you can check in anytime you want, but never leave.
This claim quotes the famous Eagles song: “You can check in any time you want, but you can never leave.” This likely refers to the current system regarding filing with the Securities and Exchange Commission. Last September, Gensler said that “only a handful of encrypted security tokens have been registered under the current system.” there It seems There were no new recordings under Gensler. This is largely due to the gray area of what is or isn’t. Under federal securities laws, a company may not offer or sell securities unless the offering is registered with the Securities and Exchange Commission or an exemption from registration is available. Until very recently, most service and cryptocurrency providers could tentatively assume they didn’t have to. This makes SEC registration largely voluntary for the time being. However, if you do sign up with the SEC, the list of compliance tasks is much longer. Getting deregistered from the SEC isn’t that easy.
High turnover in the Securities and Exchange Commission
- You have countless discoveries without the accuracy and clarity of the captives of the market.
One of the main complaints about Gary Gensler’s tenure at the Securities and Exchange Commission is that legal procedures and investigations take too long to reach a conclusion. And while the agency debates what is legal and what is not, the companies are left in limbo.
- You have impractical proposals to reform the structure of the stock market, (and) an effective ban on cryptocurrency with your proposed custody rule.
On February 15, the Securities and Exchange Commission proposed a new rule requiring investment advisors to use qualified custodians to store crypto assets. These custodians will be responsible for keeping clients’ assets separate, a practice known as segregation. The SEC has noted that most crypto assets are traded on platforms that are not qualified custodians. The Commission’s cryptocurrency advocate Hester Pearce said the proposals “broaden the range of custody requirements to crypto assets, while potentially narrowing the ranks of eligible cryptocurrency custodians.”
- You have high employee turnover (and) unhappy people leaving your office.The SEC has seen high attrition rates, reaching 6.4 percent in 2022, the highest in a decade. This is part of a larger trend across the federal government, which saw an average increase of 6.1 percent in fiscal 2021. As a result, the FSA is relying more and more on temps with little experience to fill the gap. These employees often have little rule-making experience.
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