House Republicans are demanding a briefing from the Securities and Exchange Commission about what went wrong when a false post about the approval of spot bitcoin ETFs went out on the agency’s X account earlier this week.
“The U.S. Securities and Exchange Commission’s (SEC) ability to fulfill its mission—to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation—is directly tied to the Commission’s ability to communicate with market participants,” the lawmakers wrote in a letter addressed to SEC Chair Gary Gensler on Wednesday.
A phony post went out to the SEC’s hundreds of thousands of followers on Tuesday that said the agency had granted approval for the listing of spot bitcoin ETFs, which was not the case. After the fast tweet on Tuesday, Chair Gary Gensler quickly posted from his personal account that the SEC’s X account had been compromised, and on Wednesday the agency officially approved spot bitcoin ETFs.
X confirmed in a post that the SEC’s X account was compromised, as someone obtained control over a phone number associated with the account. The platform’s security team noted that the SEC did not set up two-factor authentication for its account when it was compromised.
In a letter, House Financial Services Committee Chair Patrick McHenry, Rep. Bill Huizenga of Michigan, Rep. French Hill of Arkansas and Rep. Ann Wagner of Missouri called the SEC’s lack of two-factor authentication “unacceptable.”
The four also cited the SEC’s cybersecurity risk management rule, which requires companies to disclose “material” cybersecurity incidents within four days.
“Given yesterday’s tweet, we expect the SEC to hold itself to the same requirements that are imposed on companies throughout the country. All market participants deserve transparency from you and your agency,” they said.
The SEC has said it is working with the FBI to figure out what went wrong, and a spokesperson said earlier that the agency will provide updates as appropriate.
Lawmakers are looking for a response from the SEC by Jan. 17.
Congress response to spot bitcoin ETF approval
Rep. Wiley Nickel, D-N.C., who had also criticized the SEC’s handling of the compromised post, called the approval of spot bitcoin ETFs “historic.”
In a vote to ultimately approve the spot bitcoin ETFs, Chair Gensler parted ways from his fellow Democratic commissioners and voted to greenlight them.
“While I’m pleased with Chairman Gensler’s decision, it’s clear that his regulation by enforcement battle is losing in the courts and in public opinion,” Nickel said in a statement. “Congress has a role to play in pushing back against the SEC’s untenable approach on digital assets.”
Other crypto-friendly lawmakers supported the SEC’s move to approve spot bitcoin ETFs and said it underscored the need for their legislation.
“It will provide millions of Americans with easier access to crypto assets and allow them to benefit from professional managers and more competitive fees,” Sen. Cynthia Lummis, R-Wyo., said on Wednesday on X, while pushing for her bill with Sen. Kirsten Gillibrand, D-N.Y., to rein in crypto.
Rep. McHenry also called for legislation in a X post on Wednesday.
“While legislation to provide clarity and certainty for digital assets remains necessary, the steps taken today are a significant improvement over the SEC’s track record of regulation by enforcement,” McHenry said.
