Jessy, Golden Finance
According to a statement released by the U.S. Securities and Exchange Commission, SEC Chairman Gary Gensler, originally set to end his term in June 2026, will leave office early on January 20, 2025.
The day of his departure coincides with Trump's inauguration. Trump had promised that if he were elected, he would fire the 'cryptocurrency-unfriendly' Gary Gensler.
During the tenure of this combative chairman, the SEC tightened its stance on the cryptocurrency industry again, launching a series of high-profile lawsuits against cryptocurrency firms. 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, spot ETFs for Bitcoin and Ethereum were also successively approved.
Golden Finance has reviewed his resume and policy philosophy and found that this traditional financial elite, during his tenure at the SEC, was not keen on the wild development of the cryptocurrency industry but welcomed cryptocurrency to become part of traditional finance.
Claims to have a neutral attitude towards blockchain
Gensler's earliest relationship with the cryptocurrency industry should begin in 2018, when he was teaching at MIT and had offered a course related to blockchain, which delved into the technical issues of blockchain and explored the potential impacts this technology could have on laws and investors. His classes gave the impression that he held a neutral and curious attitude towards blockchain.
Later, after he became SEC chairman, some people also expected him to have a more forward-thinking mindset regarding virtual currencies.
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 such as Luna and FTX collapsing. The SEC also launched a major crackdown on the cryptocurrency industry, with lawsuits extending from companies to individuals, such as lawsuits against celebrities like Kardashian for promoting virtual currencies online without disclosing that they were paid endorsements. More widely known were the lawsuits filed by the SEC against several cryptocurrency exchanges, such as Binance and Coinbase, as well as lawsuits against some cryptocurrency projects, including Luna's parent company, Ripple, and BlockFi, among others. Regarding stablecoins and staking services, during Gary Gensler's tenure, the SEC indicated its stance: stablecoins may be classified as 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, in fact, a clarification of the SEC's regulatory intentions. According to Fortune magazine's report, every time Gensler attends a congressional hearing regarding virtual currencies, he repeatedly states one thing: 'Come and register.'
He has also repeatedly pointed out in public that cryptocurrencies are 'rife with fraud, scams, bankruptcies, and money laundering.'
Under Gensler's strong regulatory stance, it was surprising that in 2024, the SEC approved spot ETFs for Bitcoin and Ethereum, undoubtedly injecting a strong dose of confidence into the development of cryptocurrencies.
The seemingly contradictory behaviors above are actually underpinned by a single logic: to bring cryptocurrency under U.S. regulation.
Gensler's attitude and actions towards the cryptocurrency industry largely align with the Biden administration's policy philosophy, with regulatory strengthening being one of the main strategies of the Biden administration.
Strong-wristed traditional financial elites
Apart from the cryptocurrency industry, Gensler's other policies during his tenure at the SEC broadly include the following aspects: promoting reforms in financial market structure, proposing restrictions on high-frequency trading practices such as payment order flow to enhance market fairness; advocating for strengthened disclosure requirements for companies regarding environmental, social, and governance (ESG) issues to improve market transparency; increasing the crackdown on market manipulation and insider trading, among other things.
Facing the development of emerging technologies, he displayed a parental protective instinct; this was true for the cryptocurrency industry as well as for the AI industry. He focused on how financial companies use artificial intelligence and algorithms to influence customer behavior and studied how to regulate this technology to protect consumers.
These policies can be simply summarized as strengthening regulation of financial markets to protect 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 demands are harsh and potentially unconstitutional.
The iron-fisted regulation of the cryptocurrency industry and the strict energy conservation and emission reduction requirements to combat climate change have faced opposition from related interest groups.
The next president, Trump, had stated during his campaign that he would appoint a cryptocurrency-friendly SEC chairman and would increase domestic oil and gas production in the United States through measures such as relaxing restrictions on fossil fuels and easing the licensing process for drilling on federal lands.
From the above, it can be seen that some of Gensler's policies will be abolished after Trump takes office.
For the cryptocurrency industry, his tenure basically laid the foundation for U.S. regulation of the cryptocurrency sector, with policies aimed at protecting investors and maintaining market stability. In the context of the rapid development of the cryptocurrency market and the accumulation of risks, these policies are both necessary and urgent.
However, his regulatory approach tends to favor enforcement rather than rulemaking, punishing companies instead, which leads to uncertainty about regulatory direction in the industry. Uncertainty is detrimental to the development of an industry; without clear rules, companies do not know what to do or what not to do, severely constraining their development. Under such a policy framework, some cryptocurrency firms have migrated from the U.S. to places with clearer and more comprehensive cryptocurrency regulations, such as Singapore and Dubai.
A detail that can corroborate this is the SEC's lawsuit against Coinbase for unregistered securities, while another case was simultaneously underway where Coinbase filed a lawsuit against the SEC for rulemaking. At that time, Coinbase requested the SEC to draft comprehensive rules for the cryptocurrency industry, but the SEC rejected its request. Coinbase subsequently filed a legal lawsuit, claiming that the SEC's refusal was 'arbitrary and capricious'.
Gensler's character exhibits a combative side, which perhaps is the foundation of his extremely strong regulatory approach. During Obama's presidency, he served as the head of the Commodity Futures Trading Commission (CFTC), where colleagues commented that at the time, Gensler displayed great ambition and a tendency to hastily push various policies. Earlier, he worked at Goldman Sachs, and by the age of thirty, he became one of the youngest bankers among Goldman partners. After leaving Goldman Sachs, Gensler entered politics, serving successively as Assistant Secretary of the Treasury and Deputy Secretary of the Domestic Finance Department.
Reviewing Gensler's resume and policy philosophy, it is not difficult to find that he merely made a series of policy moves in line with U.S. national interests. Coming from a traditional financial elite background, he has been curious, skeptical, and dismissive of cryptocurrency technology, but he cannot resist the development of the times.
During his tenure, he adopted a strict enforcement approach towards cryptocurrency, not proactively promoting legislation to ensure its compliant development, showcasing his conservatism. The approval of spot ETFs for Bitcoin and Ethereum was merely a case of the water reaching 98 degrees, and he just took advantage of the situation. A deeper reason may be that, representing the interests of traditional financial elites, he dislikes uncontrolled cryptocurrency but welcomes cryptocurrency becoming part of traditional finance.
