U.S. Senate grills SEC’s Gensler over climate rule, crypto stance

Before the U.S. Senate Banking Committee on Thursday, U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler defended his organization's stance on cryptocurrencies and its drive to include climate risks in public business disclosures.

Although Gensler testified before the panel as part of its routine oversight responsibilities, Republicans are now upset with his agenda. They contend that he has overstepped his bounds by launching an extensive attack on American capital markets and taking a hostile approach against the banking sector.

Gensler, though, emphasized that his new standards are essential to ensure that the American capital markets continue to be the world's "gold standard" in prepared comments made public before to the hearing.

Sherrod Brown, a Democrat, praised Gensler's comprehensive plan. He said, "If Wall Street and its friends are whining, you're definitely doing your job."

A proposed SEC regulation requiring public corporations to report risks connected to climate change, including greenhouse gas emissions, has Republicans particularly worried. Corporate organizations claim it is burdensome and goes beyond the agency's power.

The committee's senior Republican, Pat Toomey, warned in his opening comments that "the expense of compliance will be more substantial to the investor than the information itself."

In light of a recent Supreme Court decision to limit the jurisdiction of the Environmental Protection Agency, which some legal experts claim threatens the SEC's authority on its climate regulation, he also cautioned that the SEC should be "nervous" about legal challenges.

The Democratic U.S. Senator from Montana, Jon Tester, has expressed worry about the possible effects of the climate rule on small company owners, such as farmers, who would be caught up in its demand that public businesses report emissions in their supplier networks.

However, Gensler said in his statement that the rule would provide much-needed uniformity and clarity to a matter that was essential to investors but was being reported by various firms under different frameworks, and he subsequently noted that the agency was taking all comments into consideration.

Criticisms of cryptocurrencies

Republicans pressed Gensler on cryptocurrency supervision as well because of what they saw as his increasingly hardline position.

When he suggested that cryptocurrency firms would need numerous SEC registrations and divide their activities into other legal organizations, Gensler made headlines last week.

Such "disaggregation," according to Gensler, might strengthen investor protections and prevent conflicts of interest. Instructing Congress to avoid unintentionally undermining current investor safeguards while drafting cryptocurrency legislation, he also said that SEC staff was collaborating with conventional market intermediaries interested in joining the cryptocurrency industry.

Toomey, however, claimed that the SEC had not given the cryptocurrency market any regulatory clarity and charged the agency with being negligent when the crypto lending platforms Celsius Network and Voyager Digital failed this summer, preventing thousands of retail customers from accessing their assets.

A recent agreement between U.S. and Chinese authorities on auditing U.S.-listed Chinese companies also drew a cautious response from Gensler, who noted that the agreement is only significant if U.S. officials are really allowed to thoroughly probe Chinese auditors.

He cautioned that if it didn't, 200 businesses may still be subject to trading limitations in the US.