Patrick McHenry, Chair of the United States House Financial Services Committee, has accused Gary Gensler, Chair of the Securities and Exchange Commission (SEC), of deliberately providing false information to Congress regarding the SEC’s alleged efforts to classify Ether (ETH) as a security.
In a post on April 30, Representative McHenry claimed that Gensler knowingly deceived lawmakers during his testimony before the Committee. McHenry referred to allegations made in a recent lawsuit filed by software development firm Consensys against the SEC on April 25.
Consensys’s initial complaint, filed in the U.S. District Court for the Northern District of Texas, highlighted inconsistencies in the SEC’s approach to digital assets, particularly Ether, as securities. Unredacted sections of the filing were made public on April 29, revealing that the SEC initiated an investigation into Ether as a security in March 2023.
During his appearance before the House Financial Services Committee in April 2023, Gensler evaded direct questions from McHenry about whether Ether fell under the SEC’s jurisdiction or the Commodity Futures Trading Commission’s (CFTC’s) jurisdiction. The timing of his testimony suggested that the SEC may have already considered Ether a security.
McHenry, in the Committee hearing, stated, “Clearly, an asset cannot be both a commodity and a security. I’m asking you, sitting in your chair now […] is Ether a commodity or a security?”
If the SEC’s stance on Ether puts it at odds with the CFTC, it could have implications for the approval or denial of spot Ether exchange-traded funds on U.S. exchanges. The SEC started approving investment vehicles tied to ETH futures in October 2023, and it is widely speculated that the Commission will make a decision on a spot Ether ETF in May.
McHenry took the opportunity to urge lawmakers to support the Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to establish clear regulations between the CFTC and SEC. The legislation passed the Committee in July 2023 and is scheduled for a full floor vote in the House.
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