REGULATION

Gary Gensler hearing | Refuses to answer whether BTC is a commodity, asked if tokenizing Pokémon cards would be a security

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Gary Gensler hearing | Refuses to answer whether BTC is a commodity, asked if tokenizing Pokémon cards would be a security

SEC Chairman Gary Gensler testified before the House Financial Services Committee on the morning of the 28th, where he did not abandon the argument that most cryptocurrencies are securities. Lawmakers continued their hostility, intensifying the debate.

Hearing Link

Bitcoin is Not a Security

Chair of the House Financial Services Committee Patrick McHenry criticized Gary Gensler once again, pointing out that Gensler continues to claim regulatory clarity while enforcement actions continue to harm investors, and the SEC's arguments were defeated in the Ripple lawsuit.

Patrick McHenry inquired:

I asked you about Ethereum in our last meeting, and you said that Bitcoin, Ether, Litecoin, and Bitcoin Cash are not securities. Today, I want to ask about Bitcoin, do you think Bitcoin is a security?

Gensler reiterated his view on the existence of fraud in the crypto industry, stating that it harms investor interests. He replied:

Thank you, Chairman. I think you are referring to my remarks at MIT, I believe Bitcoin is not a security because it does not meet the Howey Test.

On this black-and-white issue, both sides repeatedly interrupted, and it was difficult to determine what Gensler's answer was.

Similar to previous hearings, Gensler refused to give a direct answer, only stating that BTC does not meet the Howey Test standard, therefore, it is not a security. Despite Patrick McHenry emphasizing that this is not a trap question and asking again if BTC is a commodity, Gensler still did not provide a clear answer.

Pokemon Card Tokenization - Is It a Security?

Congressman Ritchie Torres asked Gensler if buying a Pokemon card constitutes a securities transaction.

Gensler believed that the question lacked context and buying a card only at a retail store does not constitute a securities transaction.

Ritchie Torres then asked, what if one were to buy a tokenized Pokemon card on an exchange? Would that be considered a securities transaction?

Gensler responded:

If investors expect profit from the efforts of others, then it touches upon the core of the Howey Test.

Ritchie Torres' questioning time was brief, and he later told Decrypt:

Gensler's response is inconsistent with his approach to regulating cryptocurrencies, manipulating securities laws has become his means, he disguises himself as a technology-neutral, but the example of tokenized Pokemon cards reveals his deep bias against blockchain.

Note: There is no issue with Gensler's response to the question.

SEC Prepares for Government Shutdown, Only Top Executives Remain

SEC's enforcement actions may temporarily slow down, as the federal government may shut down next week, leading to over 90% of SEC's staff being temporarily reduced.

Gensler stated:

Senior leadership will still be at work, but only core members remain, and the daily reviews and approvals of SEC documents will significantly slow down.