Biden SEC pick is no stranger to crypto
Gary Gensler’s nomination to head the U.S. Securities and Exchange is welcome news for the cryptocurrency industry given his ongoing and deep interest in the technology.
Why it matters: Although the SEC has conveyed some of its views via enforcement actions and the like under Trump-era chair Jay Clayton, the industry has been yearning for even more regulatory clarity.
What they’re saying: “He is a very smart and thoughtful person, and for the past few years, he has steeped himself in crypto, so he is very, very knowledgeable about the ecosystem and the technology, and the business too,” says Jerry Brito, executive director of Coin Center, a prominent digital currency think tank.
Flashback: Gensler, a former banker who has served in the Treasury Department and headed the Commodities and Futures Trading Commission, made headlines in 2018 when he joined MIT to teach courses about blockchain technology and as an adviser to the Media Lab’s Digital Currency Initiative.
- He correctly predicted in a 2018 speech that unlike Bitcoin, digital tokens Ether and XRP exhibit characteristics of securities, though their cases are different. In June, SEC director of Corporate Finance William Hinman declared that Ether is not a security today given its now-widely decentralized network, though he hinted its initial issuance was likely a sale of securities.
- Just days before Clayton left office in December, the SEC filed a lawsuit against XRP creator Ripple for allegedly selling unregistered securities.
Yes, but: Despite his interest and appreciation for cryptocurrencies, Gensler’s tenure won’t mean an industry free-for-all.
- “He’s very committed to securities laws and enforcing them,” says Brito. "I think people have problems with our securities laws, and they confuse that with having a problem with the SEC."
The big picture: Gensler will be leading a commission that's already not a stranger to crypto, even recently setting up its financial tech (and cryptocurrency) unit as a standalone office whose director will now report directly to the chairman.
- Commissioner Hester Peirce, who was confirmed last year for another five-year term, has also been quite friendly to the industry — she’s been affectionately nicknamed “crypto mom” by many.
What’s next: Beyond continuing to telegraph its position on token offerings, other areas the industry will be eager to get more regulatory clarity on include token exchanges (especially so-called "distributed exchanges") and custody for cryptocurrencies.
- He also has to, of course, get approved by the Senate.
The bottom line: Gensler may be in a good position to further bridge the gap between the crypto industry and securities laws, but as SEC chair he’ll also have to devote his time to other issues under the commission’s purview.