The mighty Gary Gensler, a devoted ombudsman, or crypto’s number-one public enemy?
Originally a wall street regulator, Gary Gensler’s evolution from a stalwart ombudsman and crypto professor to crypto’s antagonist has been paradoxical. His actions sparked a debate in the crypto realm, with many asking for his resignation. The big question is, should Gary Gensler resign?
This article sheds light on Gensler’s conflict with crypto and why I think he is not the right man for the job.
Meet Chairman Gary Gensler: A legacy of oversight
Gary Gensler is the presiding Chairman of the US Securities and Exchange Commission, an agency waging war against crypto. The SEC boss, a staunch ombudsman, was nominated by President Joe Biden in Feb 2021. Gensler officially took office on April 17, 2021, after Senate approval.
Gensler’s mighty reputation stems from past roles at CFTC, Maryland Financial Consumer Protection Commission (MFCPC) and several others. At CFTC, Gensler served as Chairman between 2009 and 2014, appointed by former distinguished president Barack Obama.
His role at the MFCPC started in 2017 and ended when the body was disbanded in 2019. Before that, the glorified ombudsman served other roles, including as undersecretary for Treasury for Domestic Finance. Gary Gensler has also given crypto-related classes at MIT in recent years.
Gensler’s decorated CV gave him his current job. However, the story has been quite different since taking over the SEC.
Gensler: A tainted crypto CV
Since assuming office, Gensler has built a reputation as a crypto villain. In Sept 2021, while addressing the Senate Banking Committee, Gary Gensler noted that the SEC is working overtime to develop a crypto regulatory framework. The SEC is lacking adequate regulations for the crypto realm, Gensler highlighted.
The Senate banking committee backed Gensler, even pushing for accelerating the timeline. Sen. Pat Toomey of Pennsylvania mentioned the need for clarity and transparency with the regulations before taking any enforcement actions. During this hearing, Gensler first referred to crypto as the “wild west.
This crypto bully called for registering cryptocurrency exchanges, like traditional exchanges. Moreover, Gensler shared his belief that stablecoins cause a conflict of interest leading to market integrity questions.
After FTX plummeted from glory last November, Gensler got the charge and backing to go after crypto projects. In only the first half of 2023, the SEC filed suits against Kraken, Coinbase and Binance.
Ripple’s win: A setback for Gensler’s crypto crusade
Crypto enthusiasts are celebrating Ripple’s triumph against the SEC. While Judge Torres’s decision declaring XRP ‘not security’ continues to cause joy, Gensler’s reaction suggests a continued onslaught on crypto projects. While expressing disappointment, Gensler refused to take the loss and vowed to continue regulating crypto.
The Ripple network win gives new ammunition to crypto exchanges facing the SEC with charges of illegally ‘selling securities.’ For instance, Coinbase attorneys can use Judge Torres’ logic to argue that since the tokens are traded between blind parties, they are ‘NOT’ securities.
Hence, Gensler is likely set up for more losses in the coming years. Gensler-SEC loss of the Ripple case debunked the regulator’s biggest lie, ‘all cryptocurrencies except Bitcoin are securities.’
Tom Emma: ‘Gensler, An Incompetent Cop?’
The crypto antagonist found himself in the lion’s den when he faced the House Financial Services Committee in Feb. When asked by McHenry whether ETH is security, Gensler dodged the question, failing to back his original sentiment that all cryptocurrencies except Bitcoin are securities. This massively frustrated the legislators.
Rep Warren Davinson highlighted possible collusion between Gensler and Sen. Elizabeth Warren to push the anti-crypto agenda. The Senator lists examples of power abuse by Gensler. As a consequence, Warren called for the firing of the SEC boss.
Frustrated by Gensler’s dodging of questions, Rep Tom Emma took his minutes to scold the regulator. Tom Emma even mentioned that Gensler’s approach to cryptocurrency drives the industry out of the US. “Existing SEC rules make no sense for Blockchain companies,” Tom mentioned.
In a bold statement, Tom called Gensler an “incompetent cop on the beat” who puts “everyday Americans in harm’s way and [pushes] American firms into the hands of the Chinese Communist Party.”
Behind the scenes: Gensler and Binance
In a new twist, Binance attorneys submitted to the SEC that Gensler has a personal history with Binance. Based on the attorneys, the decorated ombudsman applied for an advisory role at Binance as the uncertainty of crypto regulation continued.
Gensler, Binance CEO Zhao, and several other Binance employees were in conversation about a position. All this happened before Gensler was appointed for his SEC role. The attorneys argue that a conflict of interest resides with Gary Gensler’s involvement in this case.
Crypto regulation: Led by a non-investor?
Then comes the question of crypto ownership. Rep Bryan Steil strongly asked Gensler whether he owned any crypto. The answer is NO! The Rep pressed further, asking whether Gensler ever owned any crypto in the past, even during his MIT professor days. Again, Gensler said NO.
- Why is crypto regulation reliant on a person who never owned it?
- How can Gensler truly appreciate crypto if he does not understand the fun, joy, and pain of profiting and losing?
The lack of answers to those two questions gives an entire basis for why Gensler’s crypto crusade is flawed. It is simply a tale of power abuse.
My Take: Gensler should RESIGN!
There’s not much to say than Gensler should resign! His abuse of power, going after crypto projects even with no clear legal foundation, is evidence enough of his failure at the SEC. His desire to frustrate crypto projects while not attempting to create a legal framework aims to achieve just one thing, run crypto projects out of the US.
An SEC head should be partial—a leader who will focus on collaborating with crypto stakeholders to develop proper regulations. Gary Gensler is evidently NOT that leader.