Gensler Takes Shots at Crypto…Again

As his tenure at the US (US) Securities and Exchange Commission (SEC) nears its end, Gary Gensler remains steadfast in his call for stricter crypto regulation.

In a Bloomberg TV interview, he reiterated concerns about an industry he claims is "rife with bad actors," emphasizing the need for stronger oversight to protect investors.

Gensler, who has led the SEC since 2021, underscored the importance of enforcing existing laws and holding crypto firms accountable.

When asked about high-profile criminal cases involving FTX's Sam Bankman-Fried, Binance's Changpeng Zhao, and Terra's Do Kwon, he suggested that blockchain technology itself may operate on shaky legal ground.

Smiling, Gensler expressed:

“It's a field that was built up around noncompliance.”

Unlike traditional financial markets, which he believes are driven by fundamentals and sentiment, Gensler argued that crypto lacks real substance.

With regard to digital assets, he said:

“I've never seen a field that's so much wrapped up in sentiment, and not so much about fundamentals.”

He stated, reaffirming his stance that most digital assets are securities:

“Everyday investors deserve better disclosures and protections.”

He urged crypto firms to comply with SEC regulations and operate within the legal framework, signalling that the agency's scrutiny of the sector is far from over.

Gensler's Legacy at SEC

During his tenure at the SEC, Gensler spearheaded an aggressive crackdown on the cryptocurrency industry, targeting firms he viewed as operating outside securities laws.

He characterised the crypto market as driven more by emotion than fundamental analysis, reinforcing his stance on the need for stricter oversight.

Under his leadership, the SEC pursued high-profile cases against major players, including Coinbase for allegedly facilitating the trade of unregistered securities and Ripple Labs over the classification of XRP.

While some cases resulted in victories for the SEC, others sparked controversy, legal battles, and significant pushback from the crypto community.

Gensler’s tenure leaves behind a contentious legacy—one defined by relentless enforcement and ongoing debate over the future of crypto regulation.

Gensler Believes Appeal of Crypto is Marginal

In Wednesday's interview, Gensler framed the agency's crypto crackdown as nonpartisan, noting that his Republican predecessor, Jay Clayton, pursued similar enforcement actions.

Referring to allegedly illegal behaviour in crypto, he noted:

“When Jay was trying to address it, he brought 80 enforcement actions in this area. We've brought about 100 in our four years, which is consistent.”

However, Gensler has faced far greater backlash from the crypto community, largely due to his staunch opposition to blockchain technology's legitimacy.

When asked about the intense criticism he has received over the past four years, Gensler remained unfazed, stating that such scrutiny comes with the job.

Quoting his former boss Hilary Clinton, he said:

“If you're not willing to be attacked, you can't go into the public square and debate policy.”

He downplayed the significance of the crypto industry, suggesting its overall impact remains marginal.

Believing the risks are endemic to crypto, he continued:

“I think the public is probably aware of this. And less than 10% of the public invests in this field.”

Leadership Transition at SEC

Gensler will step down as SEC Chair on 20 January, coinciding with Donald Trump's return to the White House.

His departure is expected to bring a shift in the agency's stance on crypto regulation, with Trump expected to appoint former SEC Commissioner Paul Atkins as his successor.

Unlike Gensler, Atkins is seen as more industry-friendly, potentially reducing enforcement actions against crypto firms and steering the SEC toward a more innovation-focused approach while maintaining oversight.

Gensler, however, remains firm in his legacy, expressing satisfaction with the SEC's enforcement efforts under his leadership while acknowledging the challenges posed by an evolving digital asset landscape.

As the agency prepares for new leadership, will this mark a dramatic policy reversal, or does Gensler's regulatory crackdown reflect deeper concerns about the industry's future?