Three committee chairs in the United States House of Representatives have sent a letter to U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler demanding a more satisfactory response to their Nov. 1 letter regarding the SEC chairman’s and the agency’s compliance with recordkeeping requirements.
Judiciary Committee Chair Jim Jordan, Oversight Committee Chair James Comer and Financial Services Committee Chair Patrick McHenry stated that the response they received from Gensler to their inquiry did not address direct requests made in their letter. Specifically, they asked for certification that the SEC follows federal recordkeeping and transparency rules and that Gensler and his subordinates have not used private email accounts to conduct official business, as well as explanations of the agency’s definition and use of “off-channel communications.”
The congresspeople, along with Rep. Tom Emmer, were responding to a Wall Street Journal report criticizing the SEC and other agencies for shoddy recordkeeping. “Government officials routinely engage in the same sort of record-keeping shenanigans for which Wall Street groups were recently fined [by the SEC],” the report concluded. Specifically, the article noted the use of chats by officials for government business, which are not searched to fulfill subsequent Freedom of Information Act requests.
1/ SEC Chair Gary Gensler has wrongly prejudged that all digital assets are securities.
— Jake Chervinsky (@jchervinsky) June 29, 2023
The new letter reiterates the original requests and adds, “If you do not intend to comply with any or all of the above requests #1-5, describe the factual and legal basis for your noncompliance.” The letter, dated June 28, cited inconsistencies in Gensler’s publicly accessible meeting schedules in 2021. Crypto is mentioned.
Gensler was the object of specifically crypto-related criticism the following day, when the Blockchain Association released a paper arguing that Gensler should recuse himself from digital asset enforcement decisions. The paper claimed:
“In the digital asset space, the SEC has all but abandoned its role as a rulemaking body. Key issues of existential importance to the digital asset industry remain unresolved, chief among them the question of whether and when a digital asset represents a ‘security.’”
Gensler “has clearly stated his view” that all digital assets other than Bitcoin (BTC) are unregistered securities and all digital asset trading platforms are unregistered securities exchanges, the paper said, citing numerous statements made by the SEC chairman. Those statements show that Gensler has prejudged “everything other than bitcoin,” it continued, and:
“Due process requires not only that agency decisionmakers act without bias, but also that they avoid even the appearance of bias.”
Wells notice recipients can seek Gensler’s recusal through the SEC or in federal court, the paper reminded.