Senate Banking Committee Hears Testimony from Chair Gensler

The Senate Banking Committee held a hearing on oversight of the SEC with testimony delivered by Chair Gary Gensler. The focus of the hearing was digital assets, ESG, China-based entities, and market structure generally.

Regarding ESG and climate change, in his opening remarks, Banking Chairman Sherrod Brown noted “the SEC’s work on climate risk disclosure is also an important example of how to improve the market’s understanding of risks and to provide transparency and comparability,” adding that “clarity and uniformity are key.” On ESG disclosure, Gensler stated the SEC is focused on increasing transparency and disclosures related to investor decision-making. Gensler added, “climate-related factors and risks as well as cybersecurity risks both can affect a company’s bottom line and its future, and therefore an investor’s decision to buy, hold or sell a security or how to vote a proxy.” During his testimony, he highlighted the recent rule proposals on climate change and cybersecurity risk management.

When addressing issues in the digital asset space, Gensler stated in his written testimony, “offers and sales of these thousands of crypto security tokens are covered by the securities laws, which require that these transactions be registered or made pursuant to an available exemption.” Gensler noted, however, that “it may be appropriate to be flexible in applying existing disclosure requirements.” Gensler further stated he asked the SEC staff to examine and work with crypto intermediaries, highlighting the importance of oversight of exchanges, broker-dealers, and custodial functions touching the digital asset space.