Gary Gensler, chairman of the Securities and Exchange Commission.
SEC Chairman Gary Gensler defended the agency's approach to cryptocurrency, its climate-disclosure rule proposal and its rule-making pace at a congressional oversight hearing Tuesday.
"Investors in the crypto market should benefit from the compliance with (the law)," Mr. Gensler told lawmakers, testifying before the Republican-controlled House Financial Services Committee for the first time. "It's the law; it's really not a choice."
Mr. Gensler later said he's "never seen a field that's so non-compliant."
However, several Republicans on the committee criticized Mr. Gensler for what they said is a confusing and unclear regulatory landscape for cryptocurrency firms. The SEC has pursued an increasing number of enforcement actions against such firms, including 30 issued in 2022. Many GOP lawmakers have called the agency's approach "regulation by enforcement."
In his opening statement, Chairman Patrick McHenry, R-N.C., said the SEC is "punishing digital asset firms for allegedly not adhering to the law when they don't know it will apply to them."
"Regulation by enforcement is not sufficient nor sustainable," Mr. McHenry added.
Ahead of the hearing, all Republicans on the committee sent a letter to Mr. Gensler Tuesday, criticizing his claims that digital asset firms can simply "come in and register" with the agency.
"Without clear rules of the road, your push for firms to 'come in and register' is a willful misrepresentation of the SEC's non-existent registration process," the GOP lawmakers wrote. "The only entity to blame for the lack of registrants is the SEC itself."
Mr. Gensler told the committee that while the SEC has the authority to regulate the cryptocurrency market, "we could use more resources."
Separately, Mr. Gensler defended the merits of the agency's contentious climate disclosure rule proposal, maintaining the proposal will not burden small businesses and farms.
"Our proposal and our authorities are about public companies, and that's what (the proposal) speaks to," Mr. Gensler said. "We do not place through this proposal and nor do we intend to have any obligations on non-public companies," such as small businesses and family farms.
Concerns about the proposal's impact on small businesses are not new. In March, several environmental organizations wrote a letter to Mr. Gensler asking for more clarifications in the final rule to assuage those exact concerns.
When lawmakers grilled Mr. Gensler about the proposal, Mr. Gensler repeatedly told them, "We're not a climate regulator."
"This is about companies that are already making disclosures and trying to bring some consistency to that disclosure," he added.
Another consistent topic at the hearing was the pace of the agency's rule-making, as several lawmakers pointed out that the number of proposals released thus far under Mr. Gensler's leadership well exceeds the pace of his predecessors.
Rep. Josh Gottheimer, D-N.J., specifically asked about the potential impact on small businesses, as he said the agency's fast-paced rule-making often leads to "overlapping and rushed comment periods."
"I'm very proud of what we've done," Mr. Gensler told Mr. Gottheimer. "We put out 46 proposals to date … and on average, it's been more than 70 days from the time we vote it out, we put it on our website, and we have a formal end to a comment period. But then we get comments after that, and we take meetings after that, and we engage actively with trade associations and market participants."
Complaints about the pace of the SEC's rule-making are not limited to lawmakers — the agency's two Republican commissioners have joined several trade associations in voicing concerns about overwhelming companies with too many comment periods and compliance deadlines at once.
