Chair of the U.S. House Financial Services Committee, Patrick McHenry, strongly criticizes SEC and Gary Gensler regarding their stance on ETH security.

Patrick McHenry, Chair of the House Financial Services Committee, has criticized SEC Chair Gary Gensler over his stance on Ethereum (ETH) as a security. McHenry claims that Gensler knowingly misled Congress during his testimony last April. This accusation comes after unredacted court documents filed by Consensys Software Inc. revealed that Gensler and the SEC believed ETH to be a security for over a year. The documents show that the SEC Director of Enforcement launched an investigation into ETH in March of last year. In April 2023, Gensler avoided answering questions about whether ETH could be classified as a security. McHenry stated that this was an intentional attempt to misrepresent the SEC’s position. He argues that classifying ETH as a security contradicts previous statements by the SEC and Gensler, highlighting the agency’s inconsistent approach to regulating digital assets. Members of the crypto community expressed frustration over congressional inaction regarding the SEC’s handling of cryptocurrency regulation. The SEC has faced criticism for its heavy-handed regulatory approach to crypto, and Consensys recently received a Wells notice warning of an upcoming enforcement action. Consensys has filed its own litigation, accusing the SEC of regulatory overreach. McHenry used his condemnation of Gensler to advocate for the Financial Innovation for Technology for the 21st Century Act (FIT21), which aims to establish a regulatory framework for the crypto industry and potentially prevent further SEC enforcement actions.