Patrick McHenry, the Chair of the United States House Financial Services Committee, has accused Gary Gensler, the Chair of the Securities and Exchange Commission (SEC), of deliberately deceiving Congress regarding the SEC’s alleged efforts to classify Ether (ETH) as a security.
In a post on April 30, Representative McHenry asserted that Gensler intentionally misled lawmakers during his testimony before the Committee. McHenry referred to claims made in a recent court filing by Consensys, a software development firm that filed a lawsuit against the SEC on April 25.
Consensys’s initial complaint, filed in the U.S. District Court for the Northern District of Texas, pointed out inconsistencies in the SEC’s treatment of digital assets as securities, specifically Ether. Unredacted sections of the filing were made public on April 29, revealing that the SEC initiated an investigation into whether ETH should be classified as a security in March 2023.
Gensler appeared before the House Financial Services Committee in April 2023 and evaded direct questions from McHenry about whether Ether fell under the purview of the SEC or the Commodity Futures Trading Commission (CFTC). The timing of his testimony suggested that the SEC may have already considered Ether a security.
During the Committee hearing, McHenry stated, “Clearly, an asset cannot be both a commodity and a security. I’m asking you, sitting in your chair now… is Ether a commodity or a security?”
If the SEC’s approach to Ether puts it in conflict with the CFTC, it could have consequences for the approval or rejection of spot Ether exchange-traded funds on U.S. exchanges. The SEC began approving investment products linked to ETH futures in October 2023, and experts speculate that the Commission will make a decision on a spot Ether ETF in May.
McHenry used this opportunity to encourage lawmakers to support the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to establish clear regulations between the CFTC and SEC. The legislation was approved by the Committee in July 2023 and is scheduled for a full floor vote in the House.