Several lawmakers have vowed to remove him for causing further harm to investors.
As commissioner of the Democratic-affiliated SEC, Gary Gensler has changed his regulatory role to that of a politician seeking to be appointed Treasury Secretary, according to some congressmen.
The appointment of the 33rd Chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, on April 17, 2021, was considered a major relief in the crypto space. Nearly three years later, the former Goldman Sachs investment banker has turned against cryptocurrencies in what appears to pander to the Oval Office for future favors.
In a recent detailed article by the media outlet Fortune, Democratic Congressman Ritchie Torres argued that Gensler is simply a politician posing as a regulator. Additionally, Gensler has continued to advocate for the cryptocurrency market to be regulated by decades-old securities laws, which could significantly cripple web3 innovation in the United States compared to other jurisdictions.
Gensler’s Crypto War Stopped by Lawsuits
Having failed to work with the United States Congress to formulate clear crypto laws during the first months of his term, Gensler turned to the Howey test to regulate crypto assets, minus Bitcoin (BTC), as securities.
Furthermore, predecessor Jay Clinton, nominated by former President Donald Trump in 2017, left the current SEC administration to deal with the Ripple Labs case, which is expected to shed a lot of light on crypto assets in the United States.
In early July this year, the judge presiding over the SEC vs Ripple case ruled that sales of XRP on centralized exchanges do not constitute investment contracts and are therefore not securities. “Litigations over the SEC’s jurisdiction and others could short-circuit Gensler’s broader agenda if such lawsuits lead to court rulings that limit the agency’s powers,” Fortune noted.
Meanwhile, the odds of the US SEC approving a spot Bitcoin exchange-traded fund (ETF) increased significantly after the agency lost the case against Grayscale Investment. Interestingly, the US SEC has met with representatives of several Bitcoin spot ETF applicants, including BlackRock Inc (NYSE: BLK).
Debate Between the CFTC and the SEC
Regarding regulatory cryptocurrencies oversight, a Fortune journalist highlighted that the chairman of the US SEC has caused a lot of confusion even among lawmakers. Additionally, Gary Gensler has argued that Bitcoin is a commodity, placing it under the jurisdiction of the CFTC, but has continued to push for oversight.
Speaking to the media outlet, CFTC Commissioner Summer Mersinger cited the Coinbase Global Inc (NASDAQ: COIN) employee case involving insider trading. While the CFTC wanted to bring its case against the Coinbase employee, the US SEC claimed jurisdiction, leading to poor communication between the two agencies. “Cooperation between our law enforcement and theirs has virtually disappeared,” Mersinger told Fortune.
Gensler’s enforcement actions have often been stymied by lawsuits filed by the companies the SEC has targeted. Ripple (largely) rejected an effort to classify XRP as a security prior to Gensler’s tenure. Gensler’s aggressive approach could end up backfiring. “Litigation over [the SEC’s jurisdiction] and others could short-circuit Gensler’s broader agenda, if such lawsuits lead to court rulings that limit the agency’s powers,” according to Fortune.
Glance to the Future
While Gensler’s term is scheduled to end in June 2026, several lawmakers have vowed to remove him for causing further harm to investors. Meanwhile, the Fortune report highlighted that Gensler is seeking to be nominated for the position of Treasury Secretary, thus exposing the poor relationship with the cryptocurrency industry.
By Leonardo Perez
