In a pivotal hearing on September 18, former SEC commissioner Dan Gallagher and Michael Liftik will address Congress about the SEC's 'politicized approach' to crypto regulation, criticizing Chair Gary Gensler's enforcement tactics affecting the U.S. digital asset ecosystem.

SEC's 'Politicized Approach' to Crypto Faces Scrutiny in Congress

At a hearing on the politicization of crypto regulation that will take place on September 18, two former staff members of the United States Securities and Exchange Commission (SEC) will give testimony.

"Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets" was the title of a hearing that the US House Subcommittee on Digital Assets, Financial Technology and Inclusion announced on September 13.

SEC Veterans to Address Enforcement Agenda and Regulatory Focus

Former SEC commissioner Dan Gallagher and Michael Liftik, who served for almost a decade in various capacities at the commission, will be testifying as witnesses at the hearing on September 18.

According to the subcommittee's head, SEC Gary Gensler "prioritized and pursued an enforcement and regulatory agenda to the detriment of the digital asset ecosystem" while he was in charge of the agency.

SEC's Conflicting Stance on Crypto Securities Under the Howey Test

They referenced differences among commissioners and Gensler's stance on digital assets as securities under the Howey test, as reported by Cointelegraph.

Witnesses scheduled to appear at the meeting include Lee Reiners, a teaching fellow at Duke University, Bitwise President Teddy Fusaro, and Jennifer Schulp, who heads the Center for Monetary and Financial Alternatives' research on financial regulation.

Gensler's Approach Criticized for Stifling U.S. Crypto Growth

Schulp asserted in her written testimony that the approach taken by the SEC under Gensler "effectively amounts to a ban on crypto activity within the United States."

"[...] Gensler has laid jurisdictional claim to essentially all digital assets except for Bitcoin," Schulp told reporters. "He has repeatedly refused to provide guidance as to whether Ether can be considered a security—a position made all the more confusing by the fact that the Commodity Futures Trading Commission has deemed Ether a commodity— leaving the second largest blockchain in regulatory limbo with ongoing questions about whether the SEC will or will not assert jurisdiction."

House Republicans had already written to the SEC, claiming in a letter that the agency was using political affiliations as a hiring factor, prompting the announcement of the hearing. Upon assuming office in 2021, Democratic US President Joe Biden appointed Gensler to lead the agency.