During a recent interview on CNBC’s Squawk Box, Gary Gensler, the SEC chair, goes into depth about his term while pinpointing cryptocurrency regulation as a contentious approach and hastened reforms, alongside the strides made by the agency in climate and ESG related disclosures.
Gensler is set to leave on the same day that Donald Trump gets inaugurated as the president which is January 20th. Paul Atkins, a known proponent of cryptocurrencies, has been named as the new SEC Chair by Trump which serves as a hint for the new regulations that will come after the new administration arrives.
To provide some background Gary Gensler was appointed in 2021 during Biden’s presidency, and his regulatory reforms moved in a Biden-esque direction: big. Initiatives aimed at modernizing equity markets and increasing transparency became his hallmark. It was the unrelenting approach to regulation of the cryptocurrency market and other digital assets that earned him the most public attention and generated controversy.
He has always been very critical of the cryptocurrency space; the only exception Gensler made was for Bitcoin which he considered the only example of its kind; “Bitcoin’s not a security, but these 10,000 or 15,000 other tokens… have hurt the investing public over many years.” Sec Def Gensler noted once again that due to its decentralized structure, Bitcoin falls outside the focus of the SEC. All other tokens he described as speculative assets, many of which were not compliant with securities laws.
According to Gensler, the bitcoin market has several speculative factors into consideration and is a risky asset. This rings true especially when one considers how weak or sometimes completely lacking in substance the basis for the existence of some of the available cryptocurrencies is. Everything said indicates that such a star in the sky is and will not be for some time as strong.
Gary Gensler and his directives will leave a legacy which is divided.
He is the current chairman of the sec, Gensler has been beset with regulatory moves and set battles especially centered on the crypto sphere. The legal measures taken against the executives of Ripple Michael N. McCoy, Morgan B. Smith and Craig H. Wright, are testament to the repercussions of crypto regulation. Robinhood’s impersonation scandal is a perfect example of failures under the meticulous leadership of the SEC, where the company was forced to pay 45 million dollars in line of breach.
Department of Justice condemned the lawsuit as SEC overstepping their bounds and the suit against Ripple Labs was in fact one of the most notable actions initiated by Gensler’s SEC. The SEC claimed that Ripple was acting in breach of law when it sold XRP to it’s investors from the very first days of enabling purchases of cryptocurrency.
It is important to note that Gensler was not well received in the crypto space as can be illustrated by the lawsuit that was filed by 18 US states against the SEC, where the states accused the agency for violating the commission’s policies by sometime being too aggressive towards crypto businesses.
As noted by ConsenSys CEO Joe Lubin, it will likely be necessary to bring a truce in the dispute between Trump and the SEC and the crypto companies. Hence, there will be new possibilities for the regulation of the crypto industry.
He also recalls specific reforms that he implemented during his tenure and which were of great importance for the equity and then the Treasury markets. These included shortened settlement cycles, better corporate governance and improved overall transparency in the market.
“The U.S. Treasury market is the bedrock of our capital markets” Were Gensler’s words as he focused on the importance of this market to the global economy. He commended the bipartisan efforts of Treasury Secretary Janet Yellen and Federal Reserve Chair Jay Powell to enhance the resiliency of the market and promote competition through “all-to-all trading.” These moves would help the US government borrow more effectively by eliminating systemic risks, according to Gensler.
There are also plans for the development of this sphere. Gensler mentioned the forecast of the Congressional Budget Office that by 2028 the volume of the Treasury market will reach $36 trillion – which represents a 25% increase as compared to the current $28 trillion size. He noted that it was necessary to implement the reforms in order to safeguard against liquidity problems, and to protect foreign confidence in the US fiscal management.
