The Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, is under scrutiny for alleged noncompliance with federal recordkeeping requirements. This issue has sparked controversy in the crypto world due to the potential implications on regulatory transparency and accountability.
In November 2022, a letter addressed to Gensler and the SEC questioned their compliance with recordkeeping requirements. The primary concern revolved around evidence suggesting the SEC might not be identifying and producing records of official business conducted on non-email or ‘off-channel’ platforms like Signal, WhatsApp, Teams, and Zoom. This letter did not receive a satisfactory response, raising concerns among cryptocurrency enthusiasts about the SEC’s commitment to transparency.
Furthermore, there are growing concerns that the SEC might not be fulfilling its recordkeeping obligations related to the Administrative Procedure Act’s (APA) notice and comment rulemaking process. Specifically, it is questioned whether the SEC has adequately documented feedback on its proposed rules, which is essential for formulating rules based on a complete record, in compliance with the APA.
Public calendars show Gensler had numerous meetings with different groups since his chairmanship began in April 2021. However, only a few of these meetings are documented in the comment files, increasing worries about the SEC’s recordkeeping practices.
For instance, Gensler is reported to have met with CalPERS, a proponent of the SEC’s radical climate disclosure rule proposal, multiple times, yet only two of these meetings appear in the Climate Proposal comment file. Similar discrepancies have been noted with other groups like Better Markets and Healthy Markets, raising further questions about the SEC’s recordkeeping accuracy.
In response to these concerns, the original authors of the November 2022 letter have demanded full and accurate responses to a new set of requests. These include certifications of the SEC’s compliance with federal record-keeping and transparency requirements, an explanation of the SEC’s definition of “off-channel communications,” and the provision of lists of all such platforms and SEC employees who have used these for official business.
The SEC has until July 17, 2023, to respond to these demands. The crypto community is closely watching these developments, as they could impact the SEC’s transparency and accountability, two crucial factors in a maturing cryptocurrency regulatory environment.