The man goes by Gary Gensler, and the crypto community is not happy. Gary Gensler’s latest interview with New York Mag (NYMAG) has once again ruffled feathers in the crypto industry.
In an interview with New York Magazine on February 23, Gensler stated that “everything other than bitcoin” falls under the purview of the SEC. This is because these projects involve a middle group, and the public expects earnings based on that group.
Gary Gensler – an enemy of the crypto people
Crypto lawyers have responded to comments made by the head of the United States Securities and Exchange Commission. Although crypto assets have not yet been legally classed, Gary Gensler stated that everything but Bitcoin is a security.
The lawyers rejected Gary Gensler’s opinion, claiming that it is not legally enforceable and that determining whether crypto is a security is dependent on the facts of each case. The lawyers said that Gensler’s comments could cause market confusion and uncertainty and that the SEC should provide clear guidelines on cryptocurrency regulation.
The crypto community has reacted negatively to Gary Gensler’s remarks, believing that they will hinder innovation and investment in the field.
SEC Commissioner Hester Pierce has echoed this sentiment, urging Congress to expedite the passage of legislation and the legal classification of crypto assets. Until then, regulators like the SEC will take matters into their own hands through enforcement actions, as they have done this year.
Jacob Chervinsky, a lawyer and policy lead at the crypto advocacy organization Blockchain Association, contended in a Feb. 26 tweet that Gary Gensler’s “opinion is not the law” despite his purported grasp of the cryptocurrency industry.
Despite the fact that this is his own opinion, Gensler may be relying on PR and public opinion to support his statements. Gary Gensler knowingly took a calculated risk. This will be a triumph for the SEC and Gary Gensler, as many investors are likely to abandon the industry for risky assets as a result of his remarks.
Logan Bolinger, a lawyer, also weighed in, tweeting on February 26 that Gensler’s opinions on what is or is not a security are not legally conclusive — that is, they are not the final legal decision.
The policy director at Bitcoin Policy Institute, Jason Brett, voiced worry over Gensler’s remarks and stated that they should be feared rather than welcomed. Brett also stressed that there are alternatives to regulatory moats for attaining success in the cryptocurrency market.
Gabriel Shapiro, the general counsel at Delphi Labs, emphasized the difficulty of enforcing the SEC’s power over the cryptocurrency industry. Based on Gensler’s recent pronouncements, Shapiro predicted that the agency would need to file litigation against over 12,300 token issuers accountable for approximately $663 billion in unregistered securities deemed illegal in the United States.
However, one thing is very clear: Unless there is a comprehensive regulatory framework for digital assets in the United States, the SEC will continue its war on cryptocurrencies regardless of whether it has the authority to do so.
What can the SEC really do?
The crypto market has only recently begun to recover from the havoc SBF, and FTX caused. The SEC and Gary Gensler have the potential to punish SBF, but they have decided to play ball instead. So when will justice be served for investors in FTX and Alameda research? Maybe never? Gary Gensler has fiercely pursued everyone else in the crypto industry except for Sam-bankman Fried, which is the twist here.
Cryptocurrency markets are once again on the rise. The total market capitalization has increased by 2.4% to $1.13 trillion. Yet, for the most part of the month, it has stayed somewhat range-bound. Earlier in the day, Bitcoin was up 2.2% to $23,600, while Ethereum was up 3.3% to $1,644.
Crypto could be Gensler’s radar to the top
The political repercussions from FTX’s implosion and Bankman-Fried’s criminal indictment are far from over. It has embarrassed major figures all throughout Washington. However, it’s unclear whether it will have any ramifications for Gensler, who is widely regarded as an ambitious figure in the Biden administration.
However, there have been indications since last summer indicating the likelihood of a change in leadership at the Treasury Department, where Secretary Janet Yellen has had to cope with considerable public concern about inflation.
After nearly two decades at Goldman Sachs, Gensler began his career in government service at Treasury in the late 1990s. There have been slight rumblings in the financial press that Gensler might be interested in leading the department if Yellen decides to leave at some point in the coming years, particularly if Biden is reelected.
All of this raises the stakes for the 65-year-old as he undertakes a public defense of the SEC’s record on crypto regulation and enforcement. So what exactly is the key takeaway for the crypto industry?
The new Congress is reconsidering crypto-specific legislation, but Gensler believes that the SEC has all of the legal powers it requires. Gary Gensler will likely wing crypto regulation to his favor to lead one of the most powerful financial offices on the planet.