U.S. Representative Patrick McHenry (R-N.C.), Chairman of the House Financial Services Committee, has expressed criticism towards U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler for rejecting a rulemaking petition from cryptocurrency exchange Coinbase on December 15. In a post on social media platform X, McHenry stated that the Financial Innovation and Technology (FIT) for the 21st Century Act would instruct both the SEC and the Commodity Futures Trading Commission (CFTC) to initiate rulemaking for the cryptocurrency industry, a move he believes would enhance consumer protection.
According to McHenry, "SEC Chair @GaryGensler’s continued refusal to provide clarity for the digital asset ecosystem is shameful. If 'the law is clear' in support of his position, why does @SECgov keep losing in court? #FIT21 requires both the SEC and CFTC to conduct rulemakings with clear marching orders. This will result in more robust consumer protection and clarity for market participants."
Gensler defended the SEC's decision in a statement on December 15 published on the SEC's website. He asserted that "The existing securities regime appropriately governs crypto asset securities." Gensler also emphasized the importance of the SEC maintaining "discretion in setting its own rulemaking priorities."
Paul Grewal, Chief Legal Officer at Coinbase, revealed in a post on X that Coinbase plans to challenge what they perceive as an "arbitrary and capricious denial of our petition for crypto rulemaking" by taking legal action against the SEC.
The FIT for the 21st Century Act was proposed in July by U.S. Representatives French Hill (R-Ark.), Glenn Thompson (R-Pa.), and Dusty Johnson (R-S.D.), who are chairmen of the Subcommittee on Digital Assets, Financial Technology and Inclusion; the House Committee on Agriculture; and the Subcommittee on Commodity Markets, Digital Assets, and Rural Development, respectively. At the time of its introduction, McHenry argued that "As other countries move forward with digital asset regulatory frameworks and Chair Gensler continues his regulation by enforcement, the U.S. is falling behind. Innovators need regulatory clarity and certainty to enable this technology to achieve its full potential."
U.S. Representative Ritchie Torres (D-N.Y.), a member of the House Financial Services Committee, praised the FIT for the 21st Century Act during a July 28 discussion on X with Scott Melker, host of The Wolf of All Streets podcast. According to Torres, "The legislation regulates digital assets. It brings regulatory clarity where none exists. It protects both consumers and investors...just as importantly, it protects crypto companies from arbitrary enforcement actions on the part of the SEC."
Torres also expressed criticism towards what he referred to as the SEC's "regulation by enforcement" approach to cryptocurrency in a letter addressed to Gensler dated July 18. This was following a district court ruling that determined token XRP is not a security when sold to members of the general public.
In June, lawsuits were filed against Binance and Coinbase by the SEC for alleged violations of securities laws as reported by Federal Newswire. Both companies' CEOs responded with statements emphasizing their concerns about regulatory ambiguity for cryptocurrency companies in the United States.
McHenry has been serving North Carolina's 10th Congressional district since his first election in 2004, according to his official website.
