SEC's Gensler talks climate disclosure, crypto regulation in Senate testimony

Republicans and Democrats on the Senate Banking Committee have differing views on the Securities and Exchange Commission agenda under the stewardship of Chairman Gary Gensler, particularly when it comes to the SEC's proposed climate disclosure rule.

"Republicans on this committee have bellyached, and I assume will today, about your ambitious agenda," Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking Committee, said in his opening statement at an SEC oversight hearing Thursday. "If Wall Street and its allies are complaining, it tells me you're doing your job. You put America's savings first, you focus on transparency and fairness — two concepts critical to making sure our markets work for everyone, not just insiders, not just corporate execs."

Mr. Brown's counterparty, Sen. Pat Toomey, R-Pa., the committee's ranking member, had a conflicting viewpoint. "The SEC is wading into controversial public policy debates that are far outside its mission and its expertise, and they're doing it without the legal authority to do so," Mr. Toomey said. "And in the process, the SEC risks politicizing the agency, slowing economic growth, increasing inflation and possibly even undermining national security."

For roughly two hours, Mr. Gensler fielded questions on the pace of the SEC's agenda, its climate disclosure proposal and cryptocurrency regulation, among other topics.

Mr. Gensler repeatedly defended the climate disclosure proposal, which was unveiled in March and would require public companies to disclose a host of climate-related information in their registration statements and periodic reports.

"Investors today want to know about climate risk because it matters to the future path of the performance," Mr. Gensler said.

Mr. Toomey, who said Thursday that the proposal's endgame is to equip "climate activists with data to run political pressure campaigns against companies, often to the detriment of shareholders," added the proposal will likely face a stiff legal challenge, if implemented.

"If you go ahead with something substantively similar to the proposed rule, you're going to find a very unsympathetic court with regard to the authority that you have," Mr. Toomey told Mr. Gensler.

On cryptocurrency regulation, Mr. Gensler reiterated that of the nearly 10,000 tokens in the crypto market, the vast majority are securities, though the largest token, bitcoin, has the properties of a commodity.

Mr. Gensler said he's asked staff to work with crypto entrepreneurs to register with the SEC and said in written testimony that "given the nature of crypto investments, I recognize that it may be appropriate to be flexible in applying existing disclosure requirements."

In a speech last week, Mr. Gensler said he's open to Congress expanding the Commodities Future Trading Commission's crypto oversight authority for non-securities, including bitcoin. On Thursday, the Senate Agriculture Committee considered a bill to require all digital commodity platforms, including trading facilities, brokers, dealers and custodians, to register with the CFTC.