Patrick McHenry accuses Gary Gensler of misleading US lawmakers over Ether
United States House Financial Services Committee Chair Patrick McHenry has alleged Securities and Exchange Commission Chair Gary Gensler “knowingly misled Congress” over the regulator’s alleged attempts to classify Ether (ETH) as a security.
In an April 30 X post, Representative McHenry claimed that Gensler intentionally misled lawmakers in testimony before the Committee. The U.S. lawmaker referred to claims made in a recent court filing by software development firm Consensys, which filed a lawsuit against the SEC on April 25.
Consensys’s initial complaint in the U.S. District Court for the Northern District of Texas highlighted public inconsistencies in the SEC’s approach to digital assets as securities, specifically Ether. Unredacted sections of the filing appeared on the court docket on April 29, suggesting that the SEC launched an investigation into ETH as security in March 2023.
Gensler appeared before the House Financial Services Committee in April 2023, pivoting or ducking direct questions from McHenry on whether Ether fell under the SEC’s or the Commodity Futures Trading Commission’s (CFTC) purview. The timing of his testimony suggested that the SEC may have already considered Ether a security.
“Clearly, an asset cannot be both a commodity and a security,” said McHenry in the Committee hearing. “I’m asking you, sitting in your chair now [...] is Ether a commodity or a security?”
Related: SEC’s spot Ether ETF concerns unfounded, Consensys asserts
If the SEC is pursuing a path that could put it at odds with the CFTC over Ether, it could have ramifications for approving or denying spot Ether exchange-traded funds on U.S. exchanges. The SEC began approving investment vehicles tied to ETH futures in October 2023, with many experts speculating that the commission will decide on a spot Ether ETF in May.
McHenry used the opportunity to urge lawmakers to support the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) to establish clear rules of the road between the CFTC and SEC. The legislation moved out of Committee in July 2023 and is set for a full floor vote in the House of Representatives.
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