Gary Gensler, representing the interests of traditional financial elites, dislikes uncontrolled cryptocurrency but is pleased to see it become part of traditional finance.
Written by: Jessy, Gold Finance
According to a statement released by the U.S. Securities and Exchange Commission, SEC Chairman Gary Gensler, whose term was originally set to end in June 2026, will resign early on January 20, 2025.
His resignation date coincides with Trump's inauguration. Trump had promised that if he were elected, he would fire the 'crypto-unfriendly' Gary Gensler.
During the tenure of this highly combative chairman, the SEC tightened its stance on the cryptocurrency industry again, launching a series of high-profile lawsuits against cryptocurrency companies. Gary Gensler believes that most cryptocurrencies are securities and aims to promote compliance through a series of enforcement actions. However, on the other hand, during his tenure, Bitcoin and Ethereum spot ETFs were also successively approved.
Gold Finance has reviewed his resume and policy ideas and found that during his tenure at the SEC, this traditional financial elite was not pleased with the wild development of the cryptocurrency industry but welcomed its integration into traditional finance.
Self-proclaimed neutral attitude towards blockchain
Gensler's earliest relationship with the cryptocurrency industry likely began in 2018, when he was teaching at MIT and had offered a course related to blockchain, which deeply studied the technical issues of blockchain and explored the potential impacts of this technology on law and investors. His course gave the impression that he held a neutral and curious attitude towards blockchain.
Later, after he became SEC Chairman, some people expected him to have a more forward-thinking approach to cryptocurrency issues.
However, after Gensler took office as SEC Chairman, his attitude changed.
In 2022, the cryptocurrency industry fell into a trough, with a series of projects like Luna and FTX collapsing. The SEC also launched a major crackdown on the industry, with lawsuits extending from companies to individuals, such as suing celebrities like Kardashian for promoting virtual currencies online without disclosing they were paid endorsements. More widely known are the SEC's lawsuits against several cryptocurrency exchanges, such as Binance and Coinbase, as well as against some cryptocurrency projects, including Luna's parent company, Ripple, and BlockFi. Regarding stablecoins and staking services, during Gary Gensler's tenure, the SEC expressed its stance: stablecoins may be considered securities and need to be registered; in 2023, the SEC charged Kraken for unregistered staking services, resulting in a $30 million fine.
The advancement of a series of lawsuits against the cryptocurrency industry is actually a clarification of the SEC's regulatory intentions. According to Fortune magazine, every time Gensler attends a congressional hearing, he repeatedly states one thing about virtual currencies - 'Come register.'
He has also repeatedly pointed out in public that cryptocurrencies are 'fraught with fraud, scams, bankruptcies, and money laundering.'
Under Gensler's strong regulation, it is surprising that in 2024, the SEC successively approved Bitcoin and Ethereum spot ETFs, undoubtedly injecting a strong boost to the development of cryptocurrency.
These seemingly contradictory actions are actually underpinned by a single logic: to bring cryptocurrency under U.S. regulation.
Gensler's attitude and actions towards the cryptocurrency industry also align with the Biden administration's policy ideas, as strengthening regulation is one of the main strategies of the Biden administration.
Strong-handed traditional financial elite
In addition to the cryptocurrency industry, Gensler's other policies during his tenure at the SEC broadly include: promoting reforms in financial market structure, proposing restrictions on payment order flow and other high-frequency trading behaviors to enhance market fairness; advocating for enhanced corporate disclosures on environmental, social, and governance (ESG) issues to improve market transparency; and increasing the crackdown on market manipulation, insider trading, and other behaviors.
In the face of emerging technologies, he exhibits a protective instinct typical of a patriarch. This is true for the cryptocurrency industry and also applies to the AI industry, as he focuses on the impact of financial companies using artificial intelligence and algorithms on customer behavior and studies how to regulate this technology to protect consumers.
These policies can be simply summarized as strengthening the regulation of financial markets and protecting investor interests, especially in response to emerging technologies and some unexpected events.
Among these new policies, those addressing climate change are one of Gensler's most high-profile initiatives, aligning with the Biden administration's efforts to combat climate change, but it has sparked strong opposition from the industry, with companies stating that the policy is demanding and potentially unconstitutional.
The stringent regulation of the cryptocurrency industry and the harsh energy conservation and emission reduction requirements for the industrial sector to address climate change have faced opposition from relevant stakeholders.
The next president, Trump, had previously stated in his campaign that he would appoint a cryptocurrency-friendly SEC chairman and would increase domestic oil and gas production in the U.S. by relaxing restrictions on fossil fuels and easing permitting processes for drilling on federal land.
From the above, it can be seen that some of Gensler's policies will be abolished after Trump takes office.
For the cryptocurrency industry, under his leadership, the U.S. has essentially laid the groundwork for regulating the industry, with policies aimed at protecting investors and maintaining market stability, which are necessary and urgent in the context of rapid market development and risk accumulation.
However, his regulatory approach leans towards enforcement rather than rule-making, only punishing companies, which has left the industry uncertain about regulatory direction. Uncertainty is not conducive to the development of an industry, as companies lack clear rules and do not know what they should or should not do, severely restricting their development. Under such a policy direction, some cryptocurrency companies have migrated from the U.S. to places with more comprehensive and clearer cryptocurrency regulations, such as Singapore and Dubai.
A detail that confirms this is the SEC's lawsuit against Coinbase for unregistered securities, while another case was simultaneously ongoing where Coinbase filed a rule-making lawsuit against the SEC. At that time, when Coinbase requested the SEC to draft comprehensive rules for the cryptocurrency industry, the SEC rejected the request. Coinbase subsequently filed a legal suit, claiming that the SEC's refusal was 'arbitrary and capricious.'
Gensler has a very combative side to his personality, perhaps this underlying character has led to his extremely strong regulatory approach. During Obama's presidency, he served as head of the Commodity Futures Trading Commission (CFTC), where colleagues remarked that Gensler displayed great ambition and a tendency to push policies quickly. Earlier, he worked at Goldman Sachs and became one of the youngest partners at the firm by the age of thirty. After leaving Goldman Sachs, Gensler entered politics, serving as Assistant Secretary of the Treasury and Deputy Secretary of Domestic Finance.
By reviewing Gensler's resume and policy ideas, it is not difficult to find that he has made a series of policy moves under the guise of serving U.S. national interests. Coming from traditional financial elite, he has expressed curiosity, skepticism, and disdain towards cryptocurrency technology, but he cannot resist the development of the times.
During his tenure, he primarily enforced strict actions against cryptocurrencies, not actively promoting legislation for their compliant development, showcasing his conservativeness. The passage of Bitcoin and Ethereum spot ETFs was merely taking advantage of a situation that had already reached a boiling point. A deeper reason may be that, representing the interests of traditional financial elites, he dislikes uncontrolled cryptocurrency but welcomes its integration into traditional finance.