Gary Gensler’s appointment as head of the US Securities and Exchange is welcome news for the cryptocurrency industry given his continuing and deep interest in the technology.
Why it matters: Although the SEC has conveyed some of its views through enforcement actions and the like under Trump-era chairman Jay Clayton, the industry longs for even clearer regulatory clarity.
What they say“He’s a very smart and considerate person, and over the last few years he’s immersed himself in crypto, so he’s very, very knowledgeable about the ecosystem and the technology, and the business, too,” said Jerry Brito, CEO director of Coin Center, a prominent think tank for digital currencies.
Flash back: Gensler, a former banker who served in the treasury division and headed the commission for commodity and futures contracts, made headlines in 2018 when he joined MIT to give courses on blockchain- technology and as an advisor to the Digital Currency Initiative of the Media Lab.
- He correctly predicted in a 2018 speech that, unlike Bitcoin, digital tokens Ether and XRP display features of securities, although their business is different. In June, William Hinman, director of corporate finance at the SEC, declared that Ether was not a security today given its currently widely decentralized network, although he hinted that the initial issue was likely a sale of bonds.
- A few days before Clayton left office in December, the SEC filed a lawsuit against XRP creator Ripple for allegedly selling unregistered bonds.
Yes but: Despite his interest and appreciation for cryptocurrencies, Gensler’s tenure does not mean an industry that is free for everyone.
- “He is very committed to enforcing security laws,” says Brito. “I think people have problems with our security laws, and they confuse it with a problem with the SEC.”
The whole picture: Gensler will lead a commission that is not yet a stranger to crypto, and even recently set up its financial technology unit (and crypto-currency) as an independent office whose director will now report directly to the chairman.
- Commissioner Hester Peirce, who was confirmed for another five-year term last year, was also very friendly to the industry – she was affectionately called ‘crypto mom’.
What’s next: In addition to telegraphing the position on token offerings, other areas will be eager to gain more regulatory clarity on it, including token exchanges (especially so-called “spread exchanges”) and cryptocurrency deposits.
- He must, of course, also be approved by the Senate.
The conclusion: Gensler may be in a good position to further bridge the gap between the crypto industry and security laws, but as SEC chairman he will also have to devote his time to other matters under the commission.