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Sparks flew in Washington this week as Rep. Troy Downing delivered a scathing critique of SEC Chair Gary Gensler’s handling of cryptocurrency regulation during a high-stakes House Financial Services Committee hearing.
The hearing, which focused on digital asset oversight and regulatory clarity, quickly turned tense as Downing accused Gensler of “regulatory overreach,” lack of transparency, and what he called “a war on innovation.”
“You’ve turned the SEC into a weapon against entrepreneurs,” Downing said pointedly. “Instead of providing guidance, your agency has relied on lawsuits and intimidation to dictate policy.”
Gensler, known for his strict stance on crypto, pushed back, defending the SEC’s approach as necessary to protect investors and uphold existing securities laws. “The rules are already on the books,” Gensler replied. “Crypto doesn’t get a free pass.”
A Clash Over Clarity
At the heart of the clash was the ongoing debate over regulatory clarity in the U.S. crypto space. Downing, a vocal advocate for blockchain innovation, argued that the SEC’s lack of clear guidelines has driven companies and capital offshore.
“Your refusal to define what a security is in the crypto context is creating chaos,” Downing said. “And it’s American consumers and innovators who are paying the price.”
Gensler maintained that the Howey Test—a decades-old legal framework for identifying securities—still applies, even in a digital age.
Industry Reacts
The crypto community was quick to weigh in, with many praising Downing for standing up to what they see as a hostile regulatory environment.
“This was long overdue,” tweeted Kristin Wade, founder of a DeFi analytics firm. “We need policymakers who understand the technology and aren’t afraid to challenge outdated frameworks.”
Others, however, warned that the hearing reflects a broader polarization that could slow progress on meaningful legislation.
As calls for crypto-specific regulatory frameworks grow louder, hearings like this are likely to become more common—and more contentious. Lawmakers on both sides of the aisle are pushing for clarity, but consensus remains elusive.
In the meantime, Rep. Downing’s fiery exchange with Gensler has added fresh urgency to the debate—and reminded the crypto world that Capitol Hill is far from quiet.
