Patrick McHenry Questions SEC's Transparency On Ethereum As A Security

In an escalation of tensions between Congress and the U.S. Securities and Exchange Commission (SEC), Patrick McHenry (R-N.C.), Chair of the House Financial Services Committee, has openly criticized SEC Chair Gary Gensler for his evasive responses during a congressional hearing.

What Happened: McHenry alleged that Gensler knowingly avoided clarifying whether the SEC considers Ethereum‘s ETH/USD cryptocurrency, ether, as a security.

This accusation was spurred by revelations from court documents indicating the SEC was actively investigating ether’s status just before Gensler’s testimony.

“The refusal of Chair Gensler to address questions about the SEC's stance on ether during the hearing appears to be a deliberate misrepresentation of the agency’s position,” McHenry asserted on social media platform X, referring to evidence presented in a lawsuit filed by blockchain company Consensys.

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The debate over whether ether should be classified as a security is not just a legal technicality; it carries significant implications for the broader cryptocurrency market. Should ether be deemed a security, it could set a precedent for the regulation of numerous other digital tokens, potentially stifling innovation and investment within the sector.

In response to these developments, crypto attorney Grant Gulovsen offered a perspective that highlights the complexities of the SEC’s investigative processes.

“The initiation of an investigation by the SEC does not necessarily equate to an official stance or determination,” Gulovsen explained, indicating that the SEC's inquiry into ether does not confirm its classification as a security.

As these events unfold, the discussion around digital assets continues to evolve, emphasizing the importance of regulatory clarity.

What’s Next: This topic is also poised to be a focal point at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

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