The appointment of Gary Gensler to head the U.S. Securities and Exchange is good news for the cryptocurrency industry, due to his deep and continuing interest in the technology.
Why it matters: While the SEC has communicated some of its views through coercive and similar actions, under the Trump era presidency, Jay Clayton, the industry craves even more regulatory clarity.
What are they saying: “He is a very intelligent and caring person and, in recent years, he has immersed himself in cryptography, so he has a lot, a lot of knowledge about the ecosystem and technology, and also about business,” said Jerry Brito, executive director of the Coin Center, a prominent think tank on digital currency.
Flashback: Gensler, a former banker who served in the Treasury Department and chaired the Commodities and Futures Trading Commission, made headlines in 2018 when he joined MIT to teach courses on blockchain technology and as a consultant to the Digital Lab Initiative at the Media Lab .
- He correctly predicted in a 2018 speech that, unlike Bitcoin, Ether and XRP digital tokens exhibit bond characteristics, although their cases are different. In June, SEC Director of Corporate Finance, William Hinman, declared that Ether is not a security today given his now largely decentralized network, although he suggested that his initial issue was probably a bond sale.
- A few days before Clayton stepped down 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 mandate will not mean a free market for everyone.
- “He is very committed to the securities laws and their enforcement,” says Brito. “I think people have problems with our securities laws and confuse that with problems with the SEC.”
The big picture: Gensler will be leading a commission that is no longer unfamiliar with cryptography, even though he recently set up his financial technology unit (and cryptocurrency) as an independent office, whose director will now report directly to the president.
- Commissioner Hester Peirce, who was confirmed last year for another five-year term, has also been very friendly to the industry – she has been affectionately dubbed a “cryptographic mother” by many.
What is the next: In addition to continuing to telegraph its position on token offerings, other areas of the industry will be eager to gain more regulatory clarity on token exchanges (especially so-called “distributed exchanges”) and cryptocurrency custody.
- It also needs, of course, to be approved by the Senate.
The final result: Gensler may be in a good position to further bridge the gap between industry cryptography and securities laws, but as chairman of the SEC, he will also have to devote his time to other issues under the supervision of the commission.