Mr. Gensler later said he's "never seen a field that's so non-compliant."
However, several Republicans on the committee criticized Mr. Gensler for what they said is a confusing and unclear regulatory landscape for cryptocurrency firms. The SEC has pursued an increasing number of enforcement actions against such firms, including 30 issued in 2022. Many GOP lawmakers have called the agency's approach "regulation by enforcement."
In his opening statement, Chairman Patrick McHenry, R-N.C., said the SEC is "punishing digital asset firms for allegedly not adhering to the law when they don't know it will apply to them."
"Regulation by enforcement is not sufficient nor sustainable," Mr. McHenry added.
Ahead of the hearing, all Republicans on the committee sent a letter to Mr. Gensler Tuesday, criticizing his claims that digital asset firms can simply "come in and register" with the agency.
"Without clear rules of the road, your push for firms to 'come in and register' is a willful misrepresentation of the SEC's non-existent registration process," the GOP lawmakers wrote. "The only entity to blame for the lack of registrants is the SEC itself."
Mr. Gensler told the committee that while the SEC has the authority to regulate the cryptocurrency market, "we could use more resources."