Will a new round of regulation add insult to injury to the bear market? Is SEC Chairman Gary Gensler the biggest threat?
Will new regulation worsen the bear market? Is SEC Chair Gensler the biggest threat?
The chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, seems to have a personal vendetta against the crypto industry. From digital asset pledging to the Ripple (XRP) lawsuit, Gary is putting pressure on crypto companies to comply with regulations. Most blockchain enthusiasts see him as a villainous enforcer of securities law. However, if done right, this could make the regulation of crypto assets clearer and promote the long-term adoption of digital assets. So, is Gary Gensler’s real mission to kill Ethereum (ETH) or lay the foundation for the mainstream adoption of crypto and blockchain-based financial services?
01 Gary Gensler – Who is he?
Gary Gensler is the acting chairman of the US Securities and Exchange Commission (SEC) under the Biden administration. He is most famous in the crypto world for leading the SEC’s lawsuit against digital payment protocol Ripple, cracking down on crypto exchanges’ pledging services, and trying to turn all tokens into securities. Of course, all of this is in the name of protecting consumers.
Gary was born and raised in Baltimore, Maryland, and was exposed to finance-related things from an early age under the guidance of his father, Sam Gensler. His father ran a local bar that sold cigarettes and pinball machines, often bringing Gary along to count the total number of nickels in the machines. After graduating from high school, Gary attended the Wharton School of the University of Pennsylvania and earned a bachelor’s degree in economics. This was not enough for ambitious young Gensler, who continued his studies and eventually graduated from the Wharton School with a Master of Business Administration (MBA) degree. After obtaining his MBA degree, Gensler enthusiastically began his financial career.
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In 1979, Gary started working at Goldman Sachs, one of the world’s most prestigious investment banks. Throughout the 1980s, Gensler worked in Goldman Sachs’ mergers and acquisitions department, mostly providing consulting services to media companies, including leading a team to assist the National Football League in reaching the most profitable television broadcast deal at the time, worth about $3.6 billion.
By the time he was 30, Gary had become one of the youngest bankers to be made a partner at Goldman Sachs. He later became the firm’s co-head of finance.
Gary in Public Service
After 18 years at Goldman, President Bill Clinton nominated Gary to be Assistant Secretary of the Treasury for Financial Markets. He was quickly confirmed by the U.S. Senate and began his career in government and public service. Two years later, Gary moved within the department to become the Deputy Assistant Secretary for Domestic Finance. This position put Gary in charge of policy and legislation in key areas like capital markets, public debt management, and fiscal affairs.
For his achievements and service in these positions, Gary was awarded the Alexander Hamilton Award, the highest honor bestowed by the U.S. Treasury Department. In 2001, Gary became a senior advisor to Senator Paul Sarbanes and was recognized for his key role in the signing of the Sarbanes-Oxley Act. During the Obama administration, Gensler was sworn in as chairman of the Commodity Futures Trading Commission (CFTC). Meanwhile, he continued to earn the respect and admiration of his peers, who named him one of the greatest reformers in the aftermath of the global financial crisis.
U.S. Securities and Exchange Commission (SEC)
Following the Republican administration of Donald Trump, President Biden nominated Gary to serve as chairman of the U.S. Securities and Exchange Commission. At the SEC’s New York headquarters, Gary leads the regulatory work on crypto. (The SEC has five leaders, each member is nominated by the president and confirmed by the U.S. Senate, then the president designates one committee member to serve as chairman.)
Meanwhile, Gary is also a digital currency expert. Since 2018, Gary has been teaching courses on blockchain technology and crypto assets at the MIT Sloan School of Management.
02 Gary Gensler and the Crypto Market
Since becoming SEC chairman, Gary has launched a comprehensive war on crypto regulation. Most notably, he has led the SEC’s lawsuit against Ripple, which has been dragging on for years and could impact the future of U.S. crypto regulation. He has also fined crypto exchanges like Kraken millions of dollars for offering staking services. This has sparked a wave of fear, uncertainty, and doubt (FUD) throughout the crypto industry, as well as concerns from other top exchanges like Coinbase and its founders.
According to Gary Gensler, all cryptocurrencies except Bitcoin (BTC) are securities. Gary uses a test as a standard, claiming that there is an entrepreneurial team behind each crypto token that runs a business and investors expect to profit from it.
This also extends to the NFT field, although NFTs are easily seen as simple collectibles rather than investment tools, it’s still a gray area.
Is Gary’s opinion really that important?
Despite the significant impact of Gary Gensler’s position as SEC chairman on the way the United States regulates crypto, Gary himself is not a legal spokesperson. He did not create laws regarding crypto regulation, and he cannot manage their application.
In the United States, these critical decisions are ultimately handled by the courts and federal judges.
Gary Gensler and SBF
It is worth noting that during SBF’s heyday in crypto, Gensler worked closely with SBF. Prior to the eventual collapse of the crypto trading platform FTX, Gary Gensler and SBF had private meetings. It is speculated that SBF was contacting Gary at the time, trying to build a regulatory moat around FTX and monopolize the trading of crypto assets in the United States. While it is possible that the conspiracy theory linking SBF’s political donations to public officials is true, it has not been confirmed. Many crypto investors also quickly pointed out that Gary is more interested in chasing executives like Brad Garlinghouse of Ripple than prosecuting accused criminals like SBF.
On the other hand, despite some negative news and reputation in the crypto industry, Gary has had a successful career and reputation in finance and government. According to Bloomberg, Gary’s estimated net worth is as high as $119 million.
His mission may be to implement stricter regulations on crypto assets; however, if you live outside of the United States, you should not experience any firsthand impact from his actions.