Moctar BouraimaGary Gensler is the head of the Securities and Exchange Commission (SEC) since 2021, the US's "financial policeman". More precisely, the SEC is the federal agency responsible for protecting buyers of stock market products and enforcing regulations against market manipulation.
Since taking office, Gary Gensler has prioritized the application of regulation in the cryptocurrency sector. Thus, under his leadership, the SEC expanded the division responsible for overseeing digital assets.
Gensler also imposed fines to a number of cryptocurrency businesses (some as much as $100 million) and launched investigations into the operations of US cryptocurrency exchanges. Currently, two large companies are the target of SEC accusations including Coinbase and Ripple to name only the most notorious crypto companies.
In fact, Gensler is considered a "bête noire" by some in the crypto industry who see him as a radical regulator seeking to curtail the development of the cryptocurrency sector.
Find out who Gary Gensler is and why his positions are controversial to say the least in the crypto community.
Gensler's education and professional career
Gensler was born in 1957 in Baltimore, Maryland. He attended the Wharton School of the University of Pennsylvania, where he earned a master's degree in business administration (MBA) and a bachelor's degree in economics.
After his studies, he started working for the investment bank Goldman Sachs in 1978. Then, at the age of 30, he became a partner of the company. He was the youngest partner the company has ever known, which shows a certain confidence in his professional career. His last role at Goldman Sachs was as co-head of finance, where he oversaw international treasury and funds control initiatives.
Following his departure from Sachs, Mr. Gensler held several positions in the public finance sector. He held important positions such as senior advisor to the chairman of the Senate Banking Committee from 2001 to 2003.
Before this ascent, he had already been Undersecretary of the Treasury for Domestic Finance from 1999 to 2001. A position entrusted to him after his performance as Undersecretary of the Treasury for Financial Markets from 1997 to 1999.
Gray Gensler's Beginnings in Government
Mr. Gensler was appointed by President Bill Clinton as Deputy Secretary of the US Treasury after working for 18 years for Goldman Sachs. His career in politics and public service began after this appointment.
Two years after proving himself at the Treasury, the financial tycoon will be filled with the post of undersecretary for internal finance. In this position, Gensler took on heavy responsibilities. He was responsible for developing legislation and policy in crucial areas such as tax affairs, public debt management and capital markets.
After Mr. Obama's election, he was promoted to head the Commodity Futures Trading Commission (CFTC). Gensler also helped recover the United States from the global financial crisis. A performance which earned him the respect and admiration of his classmates, who saw in him a great reformer.
Nomination for SEC President
It was in March 2021 that President Joe Biden selected Gary Gensler to chair the SEC. Following this appointment, leaders in the cryptocurrency sector were optimistic about his mandate. They had confidence in his expertise in blockchain and cryptocurrencies, given that he was a teacher at MIT in this field.
Also, Mr. Gensler had repeatedly suggested that " cryptocurrencies have the potential to change and transform the financial industry"
"I remain intrigued by Satoshi's potential for innovation to drive change, either directly or indirectly as a catalyst. The potential to reduce verification and networking costs is worth pursuing, particularly to reduce rents economic and data privacy costs, and promote economic inclusion...cryptocurrencies and blockchain have already brought about real change and can continue to do so.source: Coindesk
However, a turning point occurred after the numerous bankruptcies and scandals that shook the crypto industry in 2022. With the serial fall of various large companies including BlockFi and the FTX platform, bringing with them an abysmal loss of billions of dollars , the US government has sought to further regulate this space.
In all likelihood, this is following the explosion of a significant number of scams, of companies built on Ponzi schemes and embezzlement, that Gensler's remarks were seen as "anti-crypto."
Quickly, in fact, Gensler hardened his positions, declaring that no sector was so “ disrespectful of the laws » than that of cryptocurrencies. The need to impose a strict regulatory framework then became apparent.
According to Gensler, it is not so much to fight and destroy the crypto industry considered as a "wild west" as to "clean up" a space and make it more efficient.
Gary Gensler and his fight to regulate the crypto space
According to Gensler's claims, the majority of cryptocurrencies are securities. Therefore, he wishes to apply the same reglementation Federal for traditional financial assets such as stocks and bonds.
It is in reality an old debate here to determine the type of asset that cryptocurrencies are. There are different types of cryptocurrencies and their nature is somewhat different from traditional stocks. However, for the SEC, while there are distinctions to consider, cryptocurrencies are “securities”, titles in the legal sense of the term.
The stock market policeman would also like all cryptocurrency exchanges to be approved by the SEC. In addition, blockchain developers and companies Web3 are also targeted by Gary. The latter asks them in particular to register with the American government and to disclose their project precisely before any deployment on the market.
However, it should be noted that bitcoin is not really one of the targets by Gensler. Indeed, the head of the SEC considers that Bitcoin stands out from other cryptocurrencies in that it is neither a security nor a transferable security.. For good reason, the asset is not governed by a single entity or person. Bitcoin then appears more like a commodity, just likeor.
Gensler made it clear that this is not the case for the majority of native layer 1 cryptocurrencies (like Ethereum and Solana). Also in its sights are the numerous tokens for decentralized applications (dapps) created on layer 1 blockchains (such as Ethereum's ERC-20 tokens). According to Gary, all of these assets can be considered securities and fall under SEC regulation.
Final word
Gary Gensler's mission within the SEC is very clear: He wants to improve the transparency and regulation of the securities market, fight against internet fraud and work to enforce the law. Also among its priorities are the regulation of publicly traded companies and the regulation of the crypto market.
As president of the SEC, Gensler has already proposed new guidelines that could have a big impact on consumers, businesses and the market as a whole. He is also followed by other politicians like Elizabeth Warren who also wants to legislate more harshly for the industry. Still, it will be interesting to see how he addresses upcoming issues and how people respond to his ideas.
It is, moreover, a position shared by theEuropean Union which has just completed the MiCA regulation to better regulate the crypto industry. This allows in particular greater clarity in terms of taxation and taxes on cryptos although there are still some unclear areas…
To go further, read the article: Why is the crypto industry panicking over the SEC's decision to classify cryptocurrencies as securities?
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