Jessy, Golden Finance
According to a statement released by the U.S. Securities and Exchange Commission, SEC Chairman Gary Gensler, whose term was originally scheduled to end in June 2026, will leave office early on January 20, 2025.
His departure comes on the day Trump takes office, and Trump has promised to fire “crypto-unfriendly” Gary Gensler if he is elected.
During the tenure of this very combative chairman, the SEC once again tightened its attitude towards the crypto industry and launched a series of high-profile lawsuits against crypto companies. Gary Gensler believes that most cryptocurrencies are securities and wants to promote compliance through a series of law enforcement actions. However, on the other hand, during his tenure, Bitcoin and Ethereum spot ETFs were also approved one after another.
Golden Finance reviewed his resume and policy philosophy and found that this traditional financial elite was not happy with the barbaric development of the crypto industry during his tenure at the SEC, but was happy to see crypto become a part of traditional finance.
Claims to be neutral on blockchain
Gensler’s earliest relationship with the crypto industry should have started in 2018, when he taught at MIT and opened a blockchain-related course that delved into the technical issues of blockchain and explored the potential impact of this technology on the law and investors. His class gave people the impression that he was neutral and curious about blockchain.
Later, when he became the chairman of the SEC, some people expected him to have a more forward-looking thinking on the issue of virtual currency.
However, after Gensler became chairman of the SEC, his attitude changed.
In 2022, the crypto industry fell into a trough, and a series of projects such as Luna and FTX collapsed. The SEC also launched its major prosecution of the crypto industry, and the scope of prosecution also spread from companies to individuals. For example, it filed lawsuits against celebrities such as Kardashian on the grounds that they “brought goods” of virtual currencies online without disclosing that they were actually paid endorsements. More well-known are the lawsuits filed by the SEC against several cryptocurrency exchanges, such as Binance and Coinbase, and others against some crypto projects, such as Luna’s parent company, Ripple, and BlockFi. When it comes to stablecoins and staking services, during Gary Gensler’s tenure, the SEC expressed its attitude towards stablecoins and staking services: stablecoins may be securities and need to be registered: In 2023, the SEC accused Kraken’s staking service of not being registered as a security, and Kraken paid a fine of US$30 million.
The advancement of a series of lawsuits against the crypto industry is actually a clarification of the SEC’s regulatory intentions. According to Fortune magazine, every time Gensler attended a congressional hearing, on the issue of virtual currency, he kept repeating the same sentence – “Come here for the record.”
He has also pointed out directly on many occasions in public that cryptocurrencies are “rife with fraud, scams, bankruptcies and money laundering.”
Under such strong supervision from Gensler, it is surprising that in 2024, the SEC approved spot ETFs for Bitcoin and Ethereum, which undoubtedly injected a shot in the arm for the development of encryption.
The above seemingly contradictory behaviors are actually based on one logic, which is to bring encryption under the supervision of the United States.
Gensler’s attitude and actions towards the encryption industry are basically in line with the Biden administration’s policy philosophy. Strengthening supervision itself is one of the Biden administration’s main strategies.
Traditional financial elites with strong skills
In addition to the crypto industry, Gensler’s other policies during his tenure at the SEC include the following aspects: promoting financial market structural reforms, proposing restrictions on high-frequency trading behaviors such as payment order flow to improve market fairness; advocating strengthening corporate disclosure requirements in environmental, social and governance (ESG) aspects to enhance market transparency; increasing crackdowns on market manipulation, insider trading and other behaviors, etc.
Faced with the development of emerging technologies, he has shown a patriarchal desire to protect the encryption industry as well as the AI industry. He pays attention to the impact of financial companies’ use of artificial intelligence and algorithms on customer behavior, and studies how to regulate this technology to protect consumers.
The above policies can be simply summarized as strengthening the supervision of financial markets and protecting the interests of investors, especially in dealing with emerging technologies and responding to some emergencies.
Among the above new policies, the policy to address climate change is one of Gensler’s most high-profile new policies. This move is consistent with the Biden administration’s efforts to address climate change, but it has triggered strong opposition from the industry, with companies saying that the policy is demanding and suspected of being unconstitutional.
The iron-fisted regulation of the crypto industry and the stringent energy-saving and emission-reduction requirements for the industrial sector to combat climate change have been opposed by relevant stakeholders.
During his campaign, the next President Trump said he would elect a crypto-friendly SEC chairman and increase domestic oil and gas production in the United States by 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 crypto industry, under his tenure, the US has basically laid the foundation for regulation of the crypto industry. Its policies are based on the original intention of protecting investors and maintaining market stability. In the context of the rapid development and risk accumulation of the crypto market, these policies are necessary and urgent.
However, his regulatory approach is biased towards law enforcement rather than rule-making, and only punishes companies, which has led to uncertainty in the industry about the direction of regulation. Uncertainty is not conducive to the development of an industry. For companies, without clear rules, they don’t know what to do and what not to do, which seriously restricts the development of companies. Under such a policy, some crypto companies have moved from the United States to places with more complete and clear crypto regulations, such as Singapore and Dubai.
One detail that can confirm this is that the SEC filed a lawsuit against Coinbase for unregistered securities, and another case was going on at the same time. Coinbase filed a rule-making lawsuit against the SEC. At that time, when Coinbase asked the SEC to draft comprehensive rules for the cryptocurrency industry, the SEC rejected its request. Coinbase then filed a lawsuit, calling the SEC’s rejection “arbitrary and capricious.”
Gensler has a very aggressive personality, and it is perhaps this personality that has led to his extremely strong regulatory skills. During Obama’s presidency, he served as the head of the Commodity Futures Trading Commission (CFTC). Some colleagues commented that at that time, Gensler showed great ambition and was eager to promote various policies. Earlier, he worked at Goldman Sachs, and at the age of 30, he became one of the youngest bankers among Goldman Sachs partners. After leaving Goldman Sachs, Gensler entered politics and served successively as Assistant Secretary of the U.S. Treasury Department and Deputy Secretary of the Department of Domestic Finance.
Looking through Gensler’s resume and governance philosophy, it is not difficult to find that he has only made a series of policy moves in line with the national interests of the United States. Coming from a traditional financial elite background, he has been curious, skeptical, and disdainful of encryption technology, but he cannot resist the development of the times.
During his tenure, he mainly took strict enforcement actions against cryptocurrencies and did not actively promote legislation to make it develop in compliance, which showed his conservatism. The passage of Bitcoin and Ethereum spot ETFs was just a matter of pushing the water forward after it had already reached 98 degrees. The deeper reason may be that he, who represents the interests of the traditional financial elite, does not like uncontrolled cryptocurrencies, but is happy to see cryptocurrencies become part of traditional finance.