Key Points
- All five SEC commissioners are set to testify before the House Financial Services Committee.
- The SEC Chair, Gary Gensler, is under investigation for alleged violation of federal law in recruitment practices.
The entire leadership of the United States Securities and Exchange Commission (SEC) is slated to appear before the House Financial Services Committee. This comes as a surprise as it was initially thought that only the SEC Chair, Gary Gensler, would be testifying. The announcement was made by FOX Business Journalist Eleanor Terrett.
Controversy Surrounding SEC Chair
Among those scheduled to testify include ex-SEC officials Dan Gallagher, who served as an SEC Commissioner from 2011 to 2015, and Michael Liftik, a former Deputy Chief of Staff to ex-SEC Chair Mary Jo White. Currently, Gallagher is the Chief Legal Officer at Robinhood Markets, and Liftik is a Partner at Quinn Emanuel Urquhart & Sullivan, LLP.
This marks the first time in five years that all five SEC commissioners will testify before the House Financial Services Committee simultaneously. The timing coincides with allegations against Gensler for illegal hiring practices. Gensler is accused of violating federal law by favoring applicants from a specific political faction, which is against the Civil Service Reform Act of 1978. As the investigation continues, there are rumors of Gensler potentially losing his position.
Despite this, Gensler is still expected to appear separately before the House next Wednesday. The news of all five SEC commissioners testifying has taken many by surprise, including crypto lawyer MetaLawMan, who speculated whether the House Financial Services Committee Chair, Patrick McHenry, will discuss the security status of Ethereum with the SEC Chair.
Ethereum’s Classification: Security or Commodity?
The debate surrounding whether Ethereum is a security or a commodity has been ongoing for several years. Prior to the SEC approving spot Ethereum ETFs, MetaLawMan referenced when New York Attorney General Letitia James declared Ethereum as a security. James compared ETH to Terra (LUNA) and its related algorithmic stablecoin UST, which experienced a crash in 2022. She also described Ethereum as a speculative asset that relies on third-party developers for profit generation.
When the SEC approved the spot Ethereum ETF offering for trading in June 2024, Ethereum’s classification seemed clearer. However, the SEC Chair’s perception of the second-largest cryptocurrency by market cap remains ambiguous. This lack of clarity has led many crypto enthusiasts to anticipate Gensler’s departure from the Commission. If Gensler is removed from his position, MetaLawMan predicts the possibility of SEC Commissioner Hester Peirce serving as the unofficial leader of the markets regulator.
