As The Block reported last week, Gary Gensler is now chairman of the U.S. Securities and Exchange Commission after being sworn in.
At the helm of the agency that trades in the largest stock markets in the world, Gensler will obviously play a key role in the Biden government’s oversight of the US financial services sector. His rise to office comes during a period of heightened scrutiny, a state of affairs that has arisen following controversy over GameStop shares and the role of platforms such as Robinhood and companies such as Citadel Securities, which is still very important plays public invisible roles in the proverbial engine room of Wall Street. As Congress examines activities such as naked short sales and order flow payments, Gensler’s agency comes to the fore – especially as the Biden government wants to take a different approach compared to the Trump years.
It is worth remembering that Gensler’s last role in the public sector was led by the Commodity Futures Trading Commission under President Barack Obama and applied the then new Dodd-Frank Act in the wake of the Great Depression. .
But what does Gensler’s new work – and the specific issues he faces – bring to the world of crypto?
Answering the above question is difficult. This is a topic that has plagued the crypto industry since Gensler’s name appeared under Biden’s potential choice for the incoming team for financial regulations.
As noted by Mike Orcutt of The Block, Gensler brings to the table a deep knowledge base of the US payment system. His outlook on blockchain technology as a whole seems to revolve around innovation in payments, given his comments from the past, including those during a Senate hearing in early March.
According to Gensler, “these innovations have been a catalyst for change. Bitcoin and other cryptocurrencies have brought new thinking to payments and financial inclusion, but they have also raised new issues of investor protection that we still need to address.”
The knowledge base could come in handy the next time Gensler appears before Congress, where he will no doubt be asked about the agency’s approach to crypto – even by those with a less than nuanced view of the technology and its applications. Thus, ‘education’ – a word used by industry stakeholders, lobbyists and even members of the Congressional Blockchain Caucus themselves to outline their mission – may come to mind for the former MIT professor.
Perhaps a more immediate consideration is the fact that Gensler will serve with Commissioner Hester Peirce, who has advocated for a more permissible U.S. regulatory stance on digital assets. Last week, Peirce saw the light of day with an updated version of her so-called token safe harbor proposal.
When reached for comment on the timing of Gensler’s launch and updating of her proposal, she told The Block:
“To get the conversation going, yesterday I proposed an updated version of my safe haven proposal that provides better protection for the token buyer and provides better clarity on how tokens can be considered non-securities.”
And when asked about Gensler’s confirmation, Peirce expressed hope that he would support her stated goal of providing more clarity on regulation for the crypto industry.
“I look forward to working with Chairman Gensler on the many issues facing the Commission, including crypto issues. I am hopeful that he will recognize the need to promote innovation and provide greater regulatory certainty to crypto. , “she told The Block.
Yet Gensler is no crypto-advocate, certainly relative to Peirce, who is in favor of reducing regulation. write big. In a 2019 conversation between the two at the MIT Bitcoin Expo, the two alluded to debates during Peirce’s time working for Senator Richard Shelby (R-AL) and Gensler’s time at the CFTC. “You won a lot of the fights, I must say. That’s why we have such a big rule book, ‘Peirce joked.
“We had that little thing called the financial crisis, you know, 10 million people lost their jobs,” Gensler replied.
But despite differing views on the relative merits of ‘more’ and ‘less’ regulation, there are clearly many areas of overlapping interest – should the two find agreement on crypto issues, Gensler’s tenure could lead to that kind of clarity which currently exists sought by the US crypto industry. Where he falls on specific proposals, such as the safe haven, remains to be seen.
However, Gensler will not increase the SEC’s position on the initial coin offering. He went on to record, also in his lectures while teaching at MIT in 2018, saying he views XRP as a security issued by Ripple. The remarks are likely to be best received by those hoping Gensler, for example, will intervene in the agency’s ongoing lawsuit against the widespread ledger company Ripple, which was sued by the SEC last year for allegedly selling XRP in unregistered security offerings.
The secure port proposal is different, as it aims to set thresholds for the registration of new token issues under those of securities, provided that the tokens can show sufficient decentralization over time. It may be easy to imagine that Gensler would have different ideas about the thresholds, but it’s still a way of accountability for projects he can support. Peirce at least insists that the proposal succeed as a large part of its policy portfolio.
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