Lawmakers to grill SEC Chair Gensler on crypto during Senate hearing

Lawmakers, frustrated by a lack of obvious progress, will grill Securities and Exchange Commission Chairman Gary Gensler over the regulator’s plans to regulate cryptocurrency markets.

Gensler, scheduled to appear before the Senate Banking Committee at 10 a.m. ET on Tuesday, is expected to field several questions on bitcoin, stablecoins and other digital assets from senators on both sides of the political aisle.

Ahead of the hearing, Wall Street’s top regulator said swaths of the crypto market are operating outside of the SEC’s regulatory frameworks that shield investors and customers from illicit activity.

“We just don’t have enough investor protection in crypto finance, issuance, trading, or lending,” Gensler said in prepared remarks. “Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications.”

He added the SEC is eager to bulk up existing authorities and, with congressional approval, expand its jurisdiction to help close the gaps in policing the crypto market.

In his remarks, Gensler said the SEC wants lawmakers’ help to oversee the offer and sales of crypto tokens, crypto trading and lending platforms, stablecoins, investment vehicles providing exposure to digital assets or crypto derivatives, as well as custody of virtual assets.

It’s unclear whether that will be enough to pacify Republicans on the committee, who for months have demanded the SEC step up its efforts to sanction crypto markets and illustrate the benefits they offer investors.

Ranking Member Pat Toomey, R-Pa., is set to grill Gensler on why it’s taken so long to support these markets and to explain why the SEC seems averse to approving various crypto assets, according to a Republican aide.

The aide spoke to CNBC on the condition of anonymity to speak freely about party leadership’s private thoughts before public testimony.

Crypto regulation is relatively new for the SEC. Gensler has repeatedly said Congress needs pass a law to magnify the commission’s power for it to be effective at managing a $2 trillion market for bitcoin and other digital currencies.

“What we want to do is provide some of the basic protections against fraud and manipulation. The trading platforms they’re on are not currently under a regulatory regime that protects them like they’re trading on the New York Stock Exchange,” Gensler told CNBC in August.

At the time, Gensler said he hopes Congress will be able to grant the SEC enough power to force trading platforms to officially register, but that some have resisted his initial requests.

In a move that frustrated crypto advocates, the SEC last week