Cryptocurrency market developments are continuing to make headlines, with the Chairman of the United States House Financial Services Committee, Patrick McHenry, accusing Securities and Exchange Commission (SEC) Chairman Gary Gensler of providing misleading information to Congress regarding the classification of Ethereum as a security.
In a post dated April 30, Representative McHenry claimed that Gensler intentionally deceived lawmakers during his testimony before the Committee. He pointed to allegations made by software development firm Consensys, which filed a lawsuit against the SEC on April 25.
Consensys highlighted inconsistencies in the SEC’s approach to crypto assets, specifically Ethereum, in its initial complaint filed in the US Northern District of Texas Court. On April 29, unaltered parts of the filing were presented as court documents, revealing that the SEC had launched an investigation into Ethereum as a security in March 2023.
During his appearance before the House Financial Services Committee in April 2023, Gensler either evaded or provided vague answers to McHenry’s direct questions 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:
“If the SEC is taking a path that could lead to a disagreement with the CFTC regarding Ethereum, it could have implications for the approval or rejection of funds traded on US exchanges for spot Ethereum.”
The SEC started approving investment vehicles linked to Ethereum futures in October 2023, and it is widely anticipated that the Commission will respond to a spot Ethereum ETF application in May.
Taking advantage of this situation, McHenry urged lawmakers to support the passage of the Financial Innovation and Technology Act for the 21st Century (FIT21), which aims to establish clear rules between the CFTC and SEC. The legislation was approved by the Committee in July 2023 and was presented for a full vote in the House.
Disclaimer: This article does not provide investment advice. Investors should be aware that cryptocurrencies carry high volatility and risk and should conduct their own research.