During a recent government meeting, Chair Gary Gensler of the Securities and Exchange Commission (SEC) faced scrutiny over the agency's handling of fee filings related to the consolidated audit trail (CAT). Earlier this year, the SEC suspended these filings to allow for public comment and assess compliance with the Exchange Act. However, exchanges circumvented this suspension by submitting identical filings in August, which the SEC subsequently allowed to go into effect despite ongoing litigation challenging the CAT funding model. Critics, including members of the committee, expressed concerns that the SEC failed to address public comments and appeared to bypass judicial processes.

The discussion also highlighted issues surrounding the regulation of digital assets. Former SEC commissioner Dan Gallagher raised concerns about the lack of a clear registration process for crypto platforms. Gensler confirmed that firms approved as special purpose broker dealers (SPBD) are not permitted to custody digital asset securities that have not been registered or exempted. This led to questions about Promethean's ether custody service, which reportedly launched without proper registration.

Commissioner Hester Peirce criticized the SEC's approach to digital asset regulation, arguing that the agency has prioritized enforcement over establishing clear regulatory guidelines. She emphasized the need for guidance to delineate what falls within securities laws and suggested collaboration with the Commodity Futures Trading Commission to clarify jurisdictional boundaries.

The meeting also touched on the Financial Stability Oversight Council (FSOC), with Gensler acknowledging his second term on the council. Concerns were raised about the FSOC's focus on risks such as climate change and digital assets, rather than addressing immediate threats like regional bank failures linked to interest rate risks. Critics argued that the council's priorities do not align with the pressing concerns of everyday Americans, suggesting a disconnect between policy and the realities faced by constituents.