Author: Jessy, Jinse Finance
According to a statement issued by the U.S. Securities and Exchange Commission (SEC), SEC Chairman Gary Gensler, whose term was originally scheduled to end in June 2026, will step down early on January 20, 2025.
The date of his resignation coincides with the inauguration of former President Trump. Trump had previously promised that if elected, he would fire the "crypto-unfriendly" Gary Gensler.
During the tenure of this combative chairman, the SEC has further tightened its stance towards the crypto industry, launching a series of high-profile lawsuits against crypto companies. Gensler believes that most cryptocurrencies are securities and wants to use a series of enforcement actions to compel their compliance. However, on the other hand, Bitcoin and Ethereum spot ETFs were also approved during his tenure.
Jinse Finance has reviewed his background and policy ideas and found that this traditional finance elite, during his tenure as SEC chairman, was unhappy with the savage development of the crypto industry, but was happy to see crypto become a part of traditional finance.
Claiming a neutral attitude towards blockchain
Gensler's earliest relationship with the crypto industry should date back to 2018, when he was teaching at MIT and had offered a blockchain-related course that delved into the technical issues of blockchain and discussed the potential impacts of this technology on the law and investors. His course gave the impression that he had a neutral and curious attitude towards blockchain.
Later, when he became SEC chairman, some people also expected him to have more forward-thinking ideas on the issue of virtual currencies.
However, Gensler's attitude changed after he became SEC chairman.
In 2022, the crypto industry fell into a downturn, with projects like Luna and FTX collapsing. The SEC also launched a major crackdown on the crypto industry, suing not only companies but also individuals, such as filing lawsuits against celebrities like the Kardashians for "promoting" cryptocurrencies online without disclosing that they were being paid. More well-known are the SEC's lawsuits against several crypto exchanges, such as Binance and Coinbase, as well as some crypto projects like the parent company of Luna, Ripple, and BlockFi. Regarding stablecoins and staking services, during Gensler's tenure, the SEC made it clear that stablecoins may be securities and need to be registered: in 2023, the SEC accused Kraken's staking service of being an unregistered security, and Kraken paid a $30 million fine.
The series of lawsuits against the crypto industry is actually a clarification of the SEC's regulatory intentions. According to a Fortune magazine report, every time Gensler testified before Congress on the issue of virtual currencies, he kept repeating one sentence - "Come in and register".
He has also directly stated in public that cryptocurrencies are "rife with fraud, scams, bankruptcies, and money laundering".
Surprisingly, despite Gensler's tough regulation, in 2024 the SEC approved the first Bitcoin and Ethereum spot ETFs, undoubtedly injecting a strong stimulus into the development of crypto.
These seemingly contradictory actions are actually under the same logic, which is to bring crypto into the regulatory framework of the United States.
Gensler's attitude and actions towards the crypto industry are also basically in line with the policy ideas of the Biden administration, as strengthening regulation is one of the main strategies of the Biden government.
A powerful traditional finance elite
In addition to the crypto industry, Gensler's other major policies during his tenure as SEC chairman include: pushing for financial market structure reform, proposing to restrict payment order flow and other high-frequency trading practices to improve market fairness; advocating for stronger corporate disclosure requirements on environmental, social and governance (ESG) issues to enhance market transparency; and cracking down more heavily on market manipulation and insider trading.
In the face of the development of emerging technologies, he has shown a paternalistic protective instinct, not only in the crypto industry, but also in the AI industry, where he is concerned about the impact of financial companies' use of artificial intelligence and algorithms on customer behavior, and is studying how to regulate this technology to protect consumers.
These policies can be summarized as strengthening financial market regulation, protecting investor interests, especially in dealing with emerging technologies and responding to some unexpected events.
Among these new policies, the policy to address climate change is one of Gensler's most high-profile new initiatives, which is consistent with the Biden administration's efforts to address climate change, but has provoked strong opposition from the industry, with companies saying the policy requirements are harsh and potentially unconstitutional.
Both the iron-fisted regulation of the crypto industry and the harsh energy-saving and emission reduction requirements for the industry to address climate change have met with opposition from the relevant stakeholders.
The next president, Trump, had previously stated in his campaign that he would appoint a crypto-friendly SEC chairman, and would also take measures such as relaxing restrictions on fossil fuels and easing the permitting process for drilling on federal lands to increase domestic oil and gas production.
It is clear that Gensler's some policies will be repealed under a Trump presidency.
For the crypto industry, under his tenure, the basic framework of U.S. regulation of the crypto industry has been established, with the policies based on the original intention of protecting investors and maintaining market stability. Given the rapid development and accumulation of risks in the crypto market, these policies are necessary and urgent.
However, his regulatory approach has been more enforcement-oriented than rule-making, only punishing companies, which has led to uncertainty in the industry about the direction of regulation. Uncertainty is detrimental to the development of an industry, as without clear rules, companies do not know what to do and what not to do, which severely constrains the development of companies. Under this policy, some crypto companies have also migrated from the U.S. to places with more comprehensive and clear crypto regulations, such as Singapore and Dubai.
One detail that illustrates this point is that while the SEC filed a lawsuit against Coinbase for an unregistered security, Coinbase was also simultaneously filing a lawsuit against the SEC, requesting that the SEC draft comprehensive rules for the crypto currency industry. At the time, Coinbase requested that the SEC draft comprehensive rules for the crypto currency industry, but the SEC refused. Coinbase then filed a lawsuit, calling the SEC's refusal "arbitrary and capricious".
Gensler's personality has a very combative side, and perhaps it is this personality foundation that has created his extremely powerful regulatory approach. When he served as chairman of the Commodity Futures Trading Commission (CFTC) during the Obama administration, a colleague evaluated that Gensler already showed great ambition and a tendency to push through various policies at that time. Even earlier, when he worked at Goldman Sachs, he became one of the youngest partners at the bank at the age of 30. After leaving Goldman Sachs, Gensler entered the political arena, serving as Assistant Secretary of the U.S. Treasury Department and Deputy Secretary of Domestic Finance, among other positions.
Reviewing Gensler's background and policy ideas, it is not difficult to find that he is simply taking a series of policy actions in line with U.S. national interests. As a traditional finance elite, he has had curiosity, skepticism and disdain for crypto technology, but he could not resist the development of the times.
During his tenure, he has focused on harsh enforcement actions against crypto, without actively promoting legislation to enable its compliant development, demonstrating his conservatism. The approval of Bitcoin and Ethereum spot ETFs was just a matter of the water having reached 98 degrees, and he gave it a final push. The deeper reason may be that, as a representative of the interests of traditional finance elites, he dislikes uncontrolled crypto, but is happy to see crypto become a part of traditional finance.
