Article reprinted from: Jinse Finance
Jessy, Jinse 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.
The date of his departure coincides with the day Trump takes office. Trump had promised that if he were elected, he would fire the 'crypto-unfriendly' Gary Gensler.
During the tenure of this combative chairman, the SEC tightened its stance on the cryptocurrency industry, launching a series of high-profile lawsuits against crypto companies. Gary Gensler believes that most cryptocurrencies are securities and seeks to promote compliance through a series of enforcement actions. On the other hand, during his tenure, both Bitcoin and Ethereum spot ETFs were approved.
Jinse Finance has reviewed his resume and governance philosophy and found that this traditional financial elite, during his tenure at the SEC, did not welcome the rampant development of the cryptocurrency industry but rather welcomed the integration of cryptocurrencies into traditional finance.
Self-described as neutral towards blockchain
Gensler's earliest relationship with the cryptocurrency industry should date back to 2018 when he was teaching at MIT and offered a blockchain-related course that deeply explored the technical issues of blockchain and discussed the potential impacts this technology could have on law and investors. His course gave the impression that he held a neutral and curious attitude towards blockchain.
After he became SEC chairman, some people expected him to have a more forward-thinking perspective on virtual currencies.
However, after Gensler took office as the chairman of the SEC, his attitude changed.
In 2022, the cryptocurrency industry fell into a downturn, with a series of projects like Luna and FTX collapsing. The SEC also launched a major crackdown on the cryptocurrency industry, with the scope of lawsuits extending from companies to individuals. For example, it sued celebrities like Kardashian for promoting virtual currencies online without disclosing that they were actually compensated endorsements. More widely known are the SEC's lawsuits against several cryptocurrency exchanges, like Binance and Coinbase, as well as lawsuits related to some cryptocurrency projects, such as Luna's parent company, Ripple, and BlockFi. Regarding stablecoins and staking services, during Gary Gensler's tenure, the SEC expressed its stance that stablecoins may qualify as securities and need to be registered. In 2023, the SEC charged Kraken for its staking services being unregistered as securities, resulting in Kraken paying 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 keeps repeating one phrase regarding virtual currencies - 'Come and register.'
He has also repeatedly pointed out in public that cryptocurrencies are 'full of fraud, scams, bankruptcies, and money laundering.'
Under Gensler's strong regulation, it is 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 cryptocurrencies.
These seemingly contradictory actions are actually underpinned by a single logic: to bring cryptocurrencies under U.S. regulatory oversight.
Gensler's attitude and actions towards the cryptocurrency industry largely align with the Biden administration's governance philosophy, as increased regulation is one of the main strategies of the Biden administration.
Strong-willed traditional financial elites
In addition to the cryptocurrency industry, other policies during Gensler's tenure at the SEC roughly include the following aspects: promoting financial market structure reform, proposing restrictions on payment order flow and other high-frequency trading practices to enhance market fairness; advocating for stronger disclosure requirements for companies regarding environmental, social, and governance (ESG) issues to improve market transparency; increasing efforts to combat market manipulation, insider trading, and other behaviors, among others.
In the face of emerging technologies, he has shown a parental protective instinct. The cryptocurrency industry is like this, and the same goes for the AI industry, where he focuses on how financial companies use artificial intelligence and algorithms to influence customer behavior and researches 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 dealing with emerging technologies and responding to some unexpected events.
Among these new policies, the climate change response policy is one of Gensler's most high-profile initiatives. This move aligns with the Biden administration's efforts to address climate change but has sparked strong opposition from the industry, with companies arguing that the policy requirements are harsh and potentially unconstitutional.
The stringent regulation of the cryptocurrency industry, as well as the harsh energy-saving and emission-reduction requirements for the industrial sector to address climate change, have faced opposition from relevant stakeholders.
The next presidential candidate Trump has stated in his campaign that he would appoint a crypto-friendly SEC chairman and would increase domestic oil and gas production in the U.S. through relaxing restrictions on fossil fuels and easing the permitting 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, during his tenure, the regulatory framework for the U.S. cryptocurrency sector was basically established. His policies were based on the intention of protecting investors and maintaining market stability. In the context of rapid development and risk accumulation in the cryptocurrency market, these policies are necessary and urgent.
However, his regulatory approach leans towards enforcement rather than rule-making, punishing companies, which has led to uncertainty about the regulatory direction in the industry. Uncertainty is detrimental to the development of an industry. Without clear rules, companies do not know what they should or should not do, severely constraining their development. Under such policies, some cryptocurrency companies have migrated from the U.S. to places with clearer and more comprehensive crypto regulations, such as Singapore and Dubai.
A detail that confirms this point is the SEC's lawsuit against Coinbase for unregistered securities, while another case is simultaneously underway, 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 rejected the request. Coinbase subsequently filed a legal lawsuit, claiming that the SEC's refusal was 'arbitrary and capricious.'
Gensler has a combative side in his character, which perhaps is the foundation for his extremely strong regulatory approach. During Obama's presidency, he served as the head of the Commodity Futures Trading Commission (CFTC), and colleagues remarked that at that time, Gensler exhibited great ambition and a tendency to hastily push various policies. Earlier, he worked at Goldman Sachs, becoming one of the youngest bankers among Goldman partners 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.
Reviewing Gensler's resume and governance philosophy, it is not difficult to find that he has made a series of policy moves that align with U.S. national interests. Coming from a traditional financial elite background, he has had curiosity, skepticism, and disdain for cryptocurrency technology, but he cannot resist the development of the times.
During his tenure, he primarily enforced strict actions against cryptocurrencies without actively promoting legislation for their compliant development, showcasing his conservatism. The approval of Bitcoin and Ethereum spot ETFs was merely a matter of the water reaching 98 degrees, allowing him to ride the wave. A deeper reason may be that, representing the interests of traditional financial elites, he dislikes uncontrolled crypto but welcomes its integration into traditional finance.
