SEC Chair Gary Gensler has reiterated his critical view of the cryptocurrency industry as he is set to step down from the leadership role in less than two weeks. Appearing on Bloomberg TV on Wednesday, Gensler stressed that the cryptocurrency market is “rife with bad actors” and “built up around non-compliance.”
Apart from Bitcoin and Ethereum, the two largest cryptocurrencies by market cap, many other projects lack solid foundations, according to Gensler. He noted that the market is heavily driven by sentiment.
“I’ve never seen a field that’s so much wrapped up in sentiment and not so much about fundamentals. And these 10,000 to 15,000 projects, many of them will not survive,”
Gensler said, adding that these projects were similar to venture capital investments that would eventually fail.
Poor Policies
When it comes to cryptocurrency regulations, Gensler stated that “there’s still work to be done,” as many people may not fully understand the risks associated with cryptocurrencies. Currently, less than 10% of the public invests in crypto, according to him.
Gensler noted that the SEC is deeply concerned about the lack of adequate disclosure when fraud and manipulation are still ongoing. He said that while his background might have led people to expect a more pro-crypto stance, his focus is always on protecting investors, which is also the SEC’s core mission.
Before joining the SEC, Gensler worked as a professor at the Massachusetts Institute of Technology (MIT), where he taught courses on blockchain technology and digital currencies. Based on his lectures, many believe he has a vast understanding of these currencies, especially Bitcoin.
The SEC’s head also co-directed MIT’s Digital Currency Initiative, which focused on research and education related to cryptocurrencies.
When asked about any evolution in his approach to cryptocurrency, Gensler said his perspective has changed since moving from academia to his role as SEC Chair.
He explained that, in academia, he could study and teach about the potential benefits of blockchain technology and new investment vehicles. But now that he’s in a regulatory position, his focus has shifted to law enforcement and protecting investors.
Mad Law Enforcement
Under Gensler’s leadership, the SEC initiated 100 crypto-related enforcement actions, adding up to 80 cases brought up during former SEC Chair Jay Clayton’s tenure.
Gensler’s tenure is also marked by legal actions against numerous high-profile industry entities, including trading platforms like Coinbase and Binance, or blockchain firms such as Ripple Labs, Consensys and Uniswap Labs. These are just a few of many.
With Gensler departing soon, the SEC will welcome Paul Atkins as its new chair. Appointed by President-elect Donald Trump, Atkins is known for his pro-crypto, pro-innovation stance. His approach is expected to put an emphasis on transparency and consistency.
The SEC under Atkins’ leadership could lean toward fostering a regulatory environment that supports the growth of cryptocurrencies while ensuring investor protection.
The SEC may soon see a major shift in its regulatory approach to the cryptocurrency industry. Current commissioners, including Hester Peirce and Mark Uyeda, are also crypto advocates.
Caroline Crenshaw, the commissioner with a strongly critical stance on spot Bitcoin ETFs, is expected to step down soon as the Senate Banking Committee canceled the vote on her reappointment. Crenshaw has faced intense opposition from the industry due to her perceived anti-crypto views, described as even worse than Gensler.
Trump’s transition team will soon reveal their pick for Commodity Futures Trading Commission (CFTC) Chair. Rostin Behnam, the current CFTC Chairman will step down from his position on January 20, 2025.
Like the SEC, the CFTC also plays a huge role in regulating the $3.5 trillion cryptocurrency market. The agency may be in more power under the incoming Trump administration.
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