Cryptocurrency market continues to see significant developments. According to reports, the Chairman of the United States House Financial Services Committee, Patrick McHenry, has accused Securities and Exchange Commission (SEC) Chairman Gary Gensler of misleading Congress regarding his claims about classifying Ethereum as a security.
Striking Statement on Ethereum
Representative McHenry claimed in a post dated April 30 that Gensler deliberately misled lawmakers during his testimony before the Committee. The US lawmaker referred to allegations recently submitted to court by software development firm Consensys, which sued the SEC on April 25.
Consensys highlighted public inconsistencies in the SEC’s approach to crypto assets, particularly Ethereum, in its initial complaint at the US Northern District of Texas Court. Unamended parts of the file appeared in court documents on April 29, indicating that the SEC had initiated an investigation into Ethereum as a security in March 2023.
Gensler appeared before the House Financial Services Committee in April 2023, where he either answered or evaded direct questions from McHenry about whether Ethereum falls under the jurisdiction of the SEC or the Commodity Futures Trading Commission (CFTC). The timing of his testimony suggests that the SEC may have already considered Ethereum as a security. McHenry made the following statement during the Committee hearing:
“Clearly, an asset cannot be both a commodity and a security. I ask you, is Ethereum a commodity or a security?”
Ethereum and ETF Process
If the SEC is pursuing a path that could lead to disagreement with the CFTC on Ethereum, it could have implications for approving or rejecting funds traded on US exchanges for spot Ethereum. The SEC began approving investment vehicles linked to Ethereum futures in October 2023, and many experts anticipate the Commission will respond to a spot Ethereum ETF application in May.
McHenry took this opportunity to encourage lawmakers to support the passage of the Financial Innovation and Technology Act for the 21st Century (FIT21) to establish clear rules between the CFTC and SEC. The legislation was passed out of the Committee in July 2023 and was presented for a full vote in the House.
