Author: Jessy, Golden Finance
According to a statement from the U.S. Securities and Exchange Commission, SEC Chairman Gary Gensler, whose term was originally set to end in June 2026, will leave office early on January 20, 2025.
His resignation date coincides with Trump's inauguration day. Trump promised that if elected, he would fire the 'crypto-unfriendly' Gary Gensler.
During the tenure of this combative chairman, the SEC again tightened its attitude towards the crypto industry, launching a series of high-profile lawsuits against crypto companies. Gary Gensler believes that most cryptocurrencies are securities and intends to prompt compliance through a series of enforcement actions. However, on the other hand, during his tenure, Bitcoin and Ethereum spot ETFs were also successively approved.
Golden Finance reviewed his resume and policy philosophy, finding that this traditional financial elite did not favor the wild development of the crypto industry during his tenure at the SEC, but welcomed crypto as a part of traditional finance.
Self-proclaimed neutral attitude towards blockchain
Gensler's earliest relationship with the crypto industry likely began in 2018, when he was teaching at MIT and offered a course related to blockchain. This course delved into the technical issues of blockchain and explored the potential impacts of this technology on laws and investors. The impression from his class was 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-looking perspective on virtual currencies.
However, after Gensler took office as SEC Chairman, his attitude changed.
In 2022, the crypto industry fell into a trough, with a series of projects like Luna and FTX collapsing. The SEC also launched its major lawsuits against the crypto industry, targeting not only companies but also individuals, such as lawsuits against celebrities like Kim Kardashian for 'promoting' virtual currencies online without disclosing that they were being paid endorsements. More widely known are the SEC's lawsuits against several cryptocurrency exchanges, such as Binance and Coinbase, as well as cases against certain crypto projects like Luna's parent company, Ripple, and BlockFi. Regarding stablecoins and staking services, during Gary Gensler's tenure, the SEC indicated its stance on stablecoins and staking services: stablecoins may be considered securities and require registration. In 2023, the SEC charged Kraken's staking services for not being registered as securities, resulting in Kraken paying a $30 million fine.
The advancement of a series of lawsuits against the crypto industry is actually a clarification of the SEC's regulatory intentions. According to reports from Fortune magazine, whenever Gensler appears at congressional hearings, he repeats one phrase regarding 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 was surprising that in 2024, the SEC approved Bitcoin and Ethereum spot ETFs one after another, undoubtedly injecting a strong dose of confidence into the development of crypto.
These seemingly contradictory behaviors are actually under one logic, that is to bring crypto under U.S. regulation.
Gensler's attitude and actions towards the crypto industry also largely align with the Biden administration's policy philosophy; strengthening regulation is one of the main strategies of the Biden administration.
Strong-handed traditional financial elite
In addition to the crypto industry, Gensler's other policies during his tenure at the SEC roughly included the following aspects: promoting reforms in financial market structure, proposing restrictions on payment order flow and high-frequency trading behaviors to improve market fairness; advocating for enhanced disclosure requirements for companies regarding environmental, social, and governance (ESG) issues to increase market transparency; and intensifying the crackdown on market manipulation and insider trading, among other actions.
In the face of emerging technologies, he showed a protective desire akin to that of a family elder; this is true for the crypto industry and also for the AI industry, where he focused on the impact of financial companies using AI and algorithms on customer behavior and studied how to regulate this technology to protect consumers.
All of these policies can be simply summarized as strengthening regulation of the financial market to protect investor interests, especially in response to emerging technologies and certain unforeseen events.
Among these new policies, the measures to address climate change are one of Gensler's most high-profile new policies, which align with the Biden administration's efforts to combat climate change, but it has sparked strong opposition from the industrial sector, with companies claiming the policy demands are excessive and potentially unconstitutional.
The iron-fisted regulation of the crypto industry and the severe energy-saving and emission reduction requirements imposed on the industry to address climate change have been met with opposition from related stakeholders.
The next president, Trump, stated during his campaign that he would appoint a crypto-friendly SEC chairman and would increase domestic oil and gas production in the U.S. through measures such as relaxing restrictions on fossil fuels and loosening drilling permit procedures on federal land.
It can be seen that some of Gensler's policies will be abolished after Trump takes office.
For the crypto industry, his tenure basically laid the groundwork for U.S. regulation of the crypto industry. His policies are based on the intention to protect investors and maintain market stability. In the context of rapid development and risk accumulation in the crypto market, these policies are both necessary and urgent.
However, his regulatory approach leaned towards enforcement rather than rule-making, only punishing companies, which led to uncertainty in the industry's regulatory direction. Uncertainty hinders industry development; without clear rules, companies do not know what to do and what not to do, severely restricting their growth. Under such policies, some crypto companies have migrated from the U.S. to places with more developed and clearer crypto regulations, such as Singapore and Dubai.
A detail that can corroborate this point is that the SEC filed a lawsuit against Coinbase for its unregistered securities case, while another case was simultaneously ongoing where Coinbase filed a lawsuit against the SEC for rule-making. At that time, Coinbase requested the SEC to draft comprehensive rules for the cryptocurrency industry, but the SEC denied its request. Subsequently, Coinbase filed a legal lawsuit, claiming that the SEC's refusal was 'arbitrary and capricious.'
Gensler has a combative personality, which may have shaped his extremely strong regulatory approach. During Obama's presidency, he served as the head of the Commodity Futures Trading Commission (CFTC) and was described by colleagues as having great ambition and a characteristic urgency in pushing various policies. Earlier, he worked at Goldman Sachs and became one of the youngest partners there at the age of thirty. After leaving Goldman Sachs, Gensler entered politics, serving as Assistant Secretary of the Treasury and Deputy Secretary of Domestic Finance, among other positions.
By reviewing Gensler's resume and policy philosophy, it is not difficult to find that he merely made a series of policy moves in alignment with U.S. national interests. Coming from a traditional financial elite background, he has had curiosity, skepticism, and disdain for crypto technology, but he cannot defy the development of the times.
During his tenure, he took a harsh enforcement approach towards cryptocurrencies, not actively promoting legislation for their compliant development, showing his conservativeness. The approval of Bitcoin and Ethereum spot ETFs was merely capitalizing on the rising tide; he just rode the wave. The deeper reason may be that he, representing the interests of traditional financial elites, dislikes uncontrolled crypto but is pleased to see crypto become a part of traditional finance.
