Lawmakers will put SEC President Gensler in the crypt during Senate hearings

Lawmakers, frustrated by the lack of obvious progress, will hold a conversation with Securities and Exchange Commission Chairman Gary Gensler about the regulator’s plans to regulate cryptocurrency markets.

Gensler, scheduled to appear before the Senate Banking Committee at 10 a.m. Tuesday, is expected to raise several questions about bitcoins, stablecoins and other digital assets of senators on both sides of the political corridor.

Prior to the hearing, Wall Street’s top regulator said cryptocurrency market areas operate outside the SEC’s regulatory frameworks that protect investors and customers from illicit activities.

“We just don’t have enough protection for investors in financing, issuance, trading or cryptocurrency lending,” Gensler said in prepared comments. “Frankly, at this point it’s more like the wild west or the old world of the ‘buyer’s account’ that existed before securities laws were enacted. This class of assets is full of fraud, scams and abuse in certain applications “.

He added that the SEC is eager to expand existing authorities and, with congressional approval, expand its jurisdiction to help close gaps in cryptographic market surveillance.

In his statements, Gensler said the SEC wants the help of lawmakers to monitor the supply and sales of cryptocurrencies, cryptocurrency lending and trading platforms, fixed currencies, investment vehicles that offer exposure to digital assets or cryptographic derivatives, as well as the custody of virtual assets.

It is unclear whether this will be enough to pacify the committee’s Republicans, who for months have demanded the SEC step up its efforts to sanction crypto markets and illustrate the benefits they offer investors.

Ranking member Pat Toomey, R-Pa., Will have to explain to Gensler why it has taken so long to support these markets and explain why the SEC seems opposed to approving various cryptographic assets, according to a collaborator republican.

The attendee spoke to CNBC on condition of anonymity to speak freely about the private thoughts of the party leadership before public testimony.

Cryptographic regulation is relatively new to the SEC. Gensler has repeatedly said that Congress needs to pass a law to increase the commission’s power so that it is effective in managing a $ 2 trillion market for bitcoins and other digital currencies.

“What we want to do is provide some of the basic protections against fraud and manipulation. The trading platforms they are currently on are not under a regulatory regime that protects them as if they were listed on the New York Stock Exchange,” he said. Gensler. CNBC in August.

At the time, Gensler said he hopes Congress can grant the SEC enough power to force trading platforms to officially register, but that some have resisted their initial requests.

To a extent that frustrated proponents of cryptography, the SEC last week again delayed its decision on whether to approve a request from the Chicago Board of Exchange to list and trade shares in VanEck’s Bitcoin Trust.

For months, the regulator has opted for the application, considered as a fan for a pool of similar funds. This angered those who had hoped that Gensler’s arrival at the head of the SEC would mean faster decisions on digital assets.

While Republicans have tended to want faster decisions from Gensler to take advantage of the speed and efficiency of digital assets, Democrats have stressed the need to be accountable and monitor what Gensler describes as the digital “wild west.”

Democrats like Ohio Sen. Sherrod Brown, chair of the committee, and Sen. Elizabeth Warren of Massachusetts have acknowledged that digital assets can have compelling use applications, but have also stressed the need for caution.

Tuesday’s hearing will also mark the committee’s first hearing with Gensler since the SEC approved new Nasdaq rules to require companies listed on its exchanges to meet certain race and gender goals.

The stipulations of the Nasdaq will ensure that company boards meet the requirements of racial and gender diversity or force companies to explain in writing why they have not done so. The move irritated committee Republicans, who say explicit focus on race and gender will could come at a high cost.

Democrats took the opposite view.

“Corporate America needs to do more to increase diversity in the boardroom,” President Brown said in August following the SEC decision. “I applaud the SEC and the Nasdaq for recognizing the benefits to businesses and shareholders of a more inclusive and equitable economy.”