Gensler’s Legacy: Crypto’s Uncertain Future

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14th January, 2025 saw Gary Gensler’s final interview on CNBC. He is set to resign from his role as the chairman of the SEC on the 20th of January. In conclusion, during this interview, what did he say to the crypto community?

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During his farewell interview on CNBC held on Jan. 14, 2025, Gary Gensler announced his resignation as the chairman of the SEC, effective from January 20. What were his parting words to the crypto community?

At the onset of the interview, host Andrew Ross Sorkin points out a significant event that provides context: Despite Gensler’s recent departure as SEC chair and the commencement of Trump administration 2.0, Robinhood brokers were required to pay a $45 million fine for violating ten separate laws within the Securities and Exchange Commission (SEC).

As for that moment, Sorkin was unaware that following the interview, the SEC would resurface the legal case against Ripple.

In the latest development, Gary Gensler reopens the Ripple case. Here’s your crypto scoop for today! #LatestUpdates #CryptocurrencyNews #TodaysNews #Ripple #DonaldTrump #ElonMusk #XRPCommunity

The Ripple case gets a new lease of life as Gary Gensler decides to revisit it. Keep up with the latest crypto news! #CurrentEvents #CryptoTrends #DailyNews #Ripple #PresidentTrump #ElonMusk #XRPEnthusiasts

Or for a more casual tone:

Gary Gensler is giving the Ripple case another spin. Here’s what you need to know about today’s crypto updates! #WhatYouMissedToday #CryptoInsights #NewsFlash #Ripple #POTUS #ElonMusk #XRPHolders

— Rexla (@RexlaGlobal) January 17, 2025

In a shrewd, insightful statement, Sorkin portrays Gensler as a tenacious warrior, tirelessly defending ancient financial regulations against the rapidly expanding world of cryptocurrencies. Here’s what Gary shared with the CNBC anchors on multiple subjects during his farewell interview.

Trump 2.0 as pro-crypto administration

Although it’s worth mentioning that significant contributions for Trump’s campaign came from crypto enthusiasts, Gensler emphasized that the election itself was not centered around or defined by cryptocurrencies.

In his remarks, Gensler implied that since his predecessor, Jay Clayton, who is joining the Trump administration, had brought forward 80 cases during his previous term, the new administration may have a zero-tolerance policy towards lawbreakers, even if they are pro-crypto.

Gensler’s epitome: cryptos are securities. Period

During his term, Sorkin noted that Gensler has primarily focused on challenging crypto firms by invoking existing regulations rather than crafting new ones tailored to the evolving digital landscape.

This question is indeed sincere, given that Gensler is often associated with viewing many cryptocurrencies as unregistered securities, a perspective that can be quite challenging for companies dealing with crypto.

Rather than attempting to tailor new rules specifically for the efficient regulation of cryptocurrency, Gensler was seeking to forcefully fit cryptocurrency into existing legal frameworks, regardless of how ill-suited they may be. The majority of these laws were not designed with cryptocurrencies in mind and largely predate their widespread use.

According to Gensler, most cryptocurrency projects should follow the laws governing securities, yet many do not comply. While there was early curiosity about Bitcoin, the SEC-era Gensler does not view cryptocurrencies as a completely new phenomenon and continues to maintain his stance that they are essentially unregistered securities.

In response to Sorkin’s query, he stated that cryptocurrencies are primarily traded based on sentiment rather than fundamental analysis. However, if a crypto company possesses strong fundamentals, they should disclose this information according to securities regulations.

Bitcoin is not a security, but other cryptocurrencies are dangerous

According to Gensler, while Bitcoin is not currently classified as a security, many other cryptocurrencies present potential risks to investors. As a law enforcement officer, it’s his responsibility to shield people from fraud, money laundering, and other criminal activities that are prevalent in this sector. Beyond that, he firmly believes that cryptocurrency exchanges often engage in practices where they trade against their own customers. In simpler terms, he emphasized the need for investor protection due to the high incidence of illegal activities and unethical practices in the crypto market.

Regarding Bitcoin, Gensler likened it to gold and pointed out that it’s a highly unstable investment often used for speculation, yet many choose to trade it. Nevertheless, Gensler admitted he cannot foretell the future of Bitcoin, and he’s uncertain if it will retain any worth in 10 or 20 years down the line.

According to Sorkin, Gensler’s efforts to regulate Bitcoin were unsuccessful because by the end of his term, Bitcoin had become more popular than ever before. However, Gensler was unable to prevent the possible bubble in Bitcoin from expanding. On two occasions, Gensler declined to express his feelings about his role in these events, which doesn’t present him as victorious. Among his major accomplishments during his tenure as SEC chair, Gensler highlighted changes in stock market policy and reforms in sectors not related to cryptocurrencies.

Afterword

Over the span of two years, Gary Gensler transitioned from a tech-enthusiast government official who was captivated by the prospects of blockchain technology, to a stringent regulator often criticized as an adversary within the SEC. Back in 2019, he penned a forward-thinking article on Bitcoin’s future for CoinDesk. However, his stance on cryptocurrencies shifted dramatically by 2021, earning him the reputation of being one of the most infamous foes of digital currencies in SEC history.

As a researcher looking back, I recall Gary Gensler, who once likened stablecoins to gambling “poker chips,” spent his tenure at the SEC immersed in legal skirmishes with Binance, Coinbase, Ripple, and Gemini. Despite these battles, he seemingly neglected the FTX collapse. I hope this retirement brings him tranquility. He maintains that he never personally held any cryptocurrencies. One can only speculate what lies ahead for Gensler; will his stance on Bitcoin soften in the future?

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2025-01-18 02:40