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How SEC chair Gary Gensler moved from crypto advisor to antagonist

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The SEC and crypto regulation03

The SEC and crypto regulation03

From earlier, seemingly crypto-supportive stances to his current hardline approach, Gary Gensler’s journey traverses his dynamic narratives, confrontations with crypto giants, and the rumors that abound, offering a unique perspective.

Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.

It’s almost reminiscent of a summer blockbuster – the good guy turns bad, keeps the audience on their toes, and leaves everyone wondering about the climax. 

The protagonist of our tale, or antagonist depending on who you ask, is Gary Gensler, the chairman of the Securities and Exchange Commission (SEC). 

The story begins in the hallowed halls of MIT, where Gensler was a professor teaching ‘Blockchain and Money.’ He was caught on tape explaining to eager students that three-quarters of the crypto market was just a commodity and not what could be classified as securities.

However, as we fast-forward to 2023, Gensler’s crypto-tune seems to have transformed, as he now declares every crypto asset, except bitcoin (BTC), a security. 

An about-face that has left everyone, including Coinbase CEO Brian Armstrong, who retweeted the video, exclaiming a stupefied “Wow!”

The pivot: Gensler’s journey from CFTC to MIT and then to SEC

Gensler’s earlier career reveals a lot about his present position. Before joining the SEC, he served as Chairman of the Commodity Futures Trading Commission (CFTC) from 2009 to 2014.

During his tenure at CFTC, Gensler was known for his proactive approach to regulatory oversight, a trait he seems to have carried into his role at the SEC.

After leaving the CFTC, he joined MIT, where he taught courses on blockchain technology and cryptocurrencies. He also authored research on the public policy implications of cryptocurrencies. 

These experiences allowed him to develop a deep understanding of the crypto world, yet his current stance suggests a stark shift from observer and educator to a staunch regulator. 

Rumors around Gensler

Now, no blockbuster is complete without whispers and rumors, and in Gensler’s saga, they are aplenty. 

Some speculate that his anti-crypto stance is due to Wall Street and big bankers’ influence, who view crypto as a direct threat to their traditional finance system. 

Meanwhile, a peculiar rumor has recently gained momentum in an exciting twist reflecting the intensity of public discontent with Gensler. 

According to a tweet by Capo WSB, Gensler was purportedly engaged in market manipulation.

The tweet, which quickly went viral, claimed that Coinbase possessed evidence of Gensler placing hefty short positions on BTC, supposedly to $2.5 million, just two days prior.

Whether grounded in fact or not, the rumor, and its subsequent attention, illustrate the level of scrutiny and criticism Gensler faces, demonstrating just how controversial his mission to regulate the crypto world has become. 

It’s a telling commentary on his reign thus far, marked by stark resistance and fierce debate. With the financial world on the brink of another potential collapse, are these just conspiracy theories, or is there a hint of truth to them?

Gensler’s rumble with the giants

With a regulatory sword in one hand and the SEC’s seal in the other, Gary Gensler, the chairman of the SEC, has embarked on an audacious crusade against the goliaths of the cryptocurrency realm. 

Coinbase, Ripple, and Binance, three global crypto juggernauts, have found themselves at the business end of Gensler’s regulatory harpoon.

Coinbase: the cornered crypto behemoth

On June 7, Gensler, the self-styled crypto sheriff, delivered a proverbial haymaker to Coinbase, the largest cryptocurrency exchange in the US. 

He charged the company with operating unlawfully, alleging it acted as an unregistered broker, exchange, and clearing agency. 

In Gensler’s view, this permitted Coinbase to sidestep critical oversight, including checks against potential conflicts of interest. A regulatory one-two punch that has left Coinbase reeling.

But the crypto giant hasn’t taken this blow lying down. Coinbase’s сhief legal officer, Paul Grewal, countered with a call for legislative clarity, pleading for fair, transparent, and universally applicable rules. 

Binance: the battle of the biggest 

Meanwhile, Gensler’s clash with Binance, the leading crypto exchange globally, has unfolded like a grand regulatory opera. 

On June 6, Binance was battered with a barrage of 13 civil charges by the SEC. The allegations ranged from non-compliance with regulatory standards to mishandling user funds and inadequate safeguards against potential market manipulation. This move resulted in liquidity issues and major outlfows.

Meanwhile, in an ironic twist of events, Gensler reportedly sought to serve as an advisor to Binance’s parent company in 2019. 

This revelation comes from lawyers for Binance and founder Changpeng Zhao, asserting that Gensler had proposed his advisory role in several meetings with Binance executives, even meeting Zhao for lunch in Japan. 

At that time, Gensler was a lecturer at MIT. Binance’s lawyers state that the then-future SEC Chair was “comfortable serving as an informal advisor.” 

Ripple: the showdown is still in motion 

Ripple, another significant player in the crypto sphere, has also been signed by Gensler’s regulatory firestorm. 

In an ongoing lawsuit initiated before Gensler’s appointment, the SEC asserts that Ripple’s digital token, XRP, qualifies as a security and should have been registered. Ripple counters this claim, asserting XRP is a cryptocurrency and doesn’t fit the security mold. 

The verdict of this case could be a game-changer for how other cryptocurrencies are treated, adding yet another layer to Gensler’s tempestuous tango with the crypto industry.

Gensler’s regime: benevolent protector or crypto constrictor?

Genler’s framing of the crypto market as a 21st-century echo of the US stock market of the 1920s suggests his longing for a bygone era when regulatory control was a bit more unambiguous.

Many argue that Gensler’s nostalgic vision is akin to viewing cryptocurrencies’ dynamic, fast-evolving world through a dusty, old-fashioned lens.

Voices of dissent against Gensler’s tactics have been growing, reaching a crescendo with Congressman Warren Davidson proposing legislation to oust Gensler and replace him with an SEC director. 

Such a dramatic move underlines the simmering discontent against Gensler’s reign and opens the door to speculation about a potential regime change at the SEC.

Crypto innovations: the exodus threat 

Prominent figures in the crypto world, such as Brian Armstrong, Coinbase CEO, have cautioned that other nations with more crypto-friendly regulations may become hotbeds of blockchain innovation if the US persists with its hardline approach. 

Such warnings point towards the potential unintended consequences of Gensler’s aggressive strategy, namely, a brain drain of blockchain talent and entrepreneurship.

The endgame of this standoff remains uncertain, but one thing is clear: the crypto world isn’t planning on going quietly into the night. 

Gensler might believe he’s got the regulatory high ground. Still, if he’s not careful, he might end up standing alone, presiding over a deserted battlefield, as the crypto innovators he sought to regulate have migrated to more welcoming environments.

And the saga continues

While Gensler’s actions may seem overbearing to the crypto crowd, there’s another side to the coin. Maybe Gensler views himself as the hero, boldly reining in the crypto Wild West for everyone’s sake. 

His goal could be to make the crypto industry not fear but welcome regulation, just as Dr. Strangelove grew fond of the bomb. But with his moves causing more uproar than understanding, it seems Gensler’s lessons aren’t quite landing.

Gensler’s fortress appears to be built on an ever-growing heap of regulation. But as he piles up rules and enforcement actions, he could build a wall between himself and the industry he’s trying to govern. 

Is Gensler in danger of becoming a lone wolf regulator, trapped in an echo chamber where his mantra for more regulation bounces off the walls?

Gensler could be seen as a misunderstood lead character. But as the public increasingly sketches him as the bad guy, he should remember this: a hero’s as good as the crowd thinks he is. 

In the court of public opinion, it’s the people who deliver the verdict. Gensler might want to think twice about who he’s serving with his wave of regulation.

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