Gary Gensler: Is the SEC Chair Cryptocurrency’s Greatest Threat?

Securities and Exchange Commission Chair Gary Gensler seems to have a personal vendetta against the crypto industry. From digital asset staking to the Ripple (XRP) lawsuit, Gensler is bringing the regulatory hammer down on crypto firms. 

Most blockchain enthusiasts consider SEC chair Gary Gensler a villainous enforcer of Securities Laws. However, it’s also possible that bringing greater clarity to crypto asset regulation will benefit long-term digital currency adoption.

Is Gary Gensler truly on a mission to suffocate Ethereum (ETH), or is he laying the foundation for cryptocurrency and blockchain-based financial services to go mainstream?

Who Is Gary Gensler?

Gary Gensler is the acting chairman of the U.S. Securities and Exchange Commission under Joe Biden’s government. He’s most well-known in the cryptocurrency world for leading the SEC’s lawsuit against Ripple, cracking down on crypto exchange staking services, and trying to label everything as a security.

All in the noble name of consumer protection, of course. 

Education

Gensler was born and raised in Baltimore, Maryland. The future chairman of the SEC was exposed to finance from an early age by his father, Sam Gensler. Sam Gensler managed cigarette and pinball machines with local bars and often brought Gary along to help count nickels from his machines.

After graduating from high school, Gary Gensler attended the University of Pennsylvania’s Wharton School of Business and completed an undergraduate degree in economics. This wasn’t enough for an ambitious young Gensler, who continued his studies and finally graduated from the Wharton School with a master’s in business administration in.

MBA in hand, Gensler launched into his financial career with gusto.

Professional Career

In 1979, Gensler began his tenure at Goldman Sachs, one of the world’s most reputable investment banking firms. Throughout the 1980s, Gensler worked in Goldman Sachs’ mergers and acquisition sector, primarily advising media companies. This included leading a team that assisted the National Football League in landing the most lucrative television deal at the time, valued at around $3.6 billion.

By the tender age of 30, Gensler was one the youngest bankers to have ever made partner at Goldman Sachs. He went on to become the co-head of finance at the firm. 

Gensler in the Public Service

After 18 years of service at Goldman Sachs, President Bill Clinton nominated Gensler as Assistant Secretary of the U.S. Treasury. He was promptly confirmed for the role by the U.S. Senate and began his career in government and public service.

After two years, Gensler shifted departments and served as Under Secretary for Domestic Finance. This position placed a weight of responsibilities on Gensler’s shoulders. He was responsible for formulating policy and legislation in key areas like capital markets, public debt management, and fiscal affairs.

In recognition of his achievements and services in these roles, Gensler was awarded the Alexander Hamilton award, the highest honor within the U.S. Treasury Department. In 2001, Gensler became the senior advisor to U.S. Senator Paul Sarbanes and was credited with playing a significant role in signing the Sarbanes-Oxley Act.

During the Obama administration, Gensler was sworn in as Chairman of the Commodity Futures Trading Commission (CFTC). He continued to earn the respect and admiration of his peers, who considered him one of the great reformers following the global financial crisis.

The U.S. Securities and Exchange Commission

In the wake of Trump’s Republican administration, Gensler was nominated for his current role as SEC Chair by President Joe Biden. Based in New York, Gensler is leading the regulatory charge against cryptocurrency.

According to MIT’s Sloan School of Management, Gensler is a digital currency expert. Since 2018, Gensler has taught courses about blockchain technology and cryptocurrency use cases to a new generation of learners.

Gary Gensler vs. the Crypto Market

Since stepping into his role as Chairman of the U.S. Securities and Exchange Commission, Gensler has launched a full-fledged war on cryptocurrency regulation. Most notably, he leads the SEC’s lawsuit against Ripple, which has dragged on for years and may shape the future of crypto regulation in the U.S. 

He’s also issued millions worth of fines to crypto exchanges like Kraken over their staking offering. This sent waves of fear, uncertainty, and doubt throughout the crypto industry. Undaunted, other top exchanges like Coinbase and its founder Brian Armstrong expressed concerns against Gensler’s crackdowns.

According to Gary Gensler, every cryptocurrency other than Bitcoin (BTC) is a security. Using the Howey Test as a measuring stick, Gensler claims every crypto token has a team of entrepreneurs behind it running a business, with investors expecting to profit from the efforts of others. 

Arguably, this also extends to NFTs, though this is still a grey area. NFTs can easily be considered simple collectibles, as opposed to investment vehicles.

Is Gensler’s Opinion Really That Important?

 It’s important to remember that even though Gary Gensler’s position as SEC Chair significantly influences how crypto is regulated in the U.S., Gensler himself is not the voice of the law. He doesn’t write the laws on crypto regulation. He doesn’t even govern how they’re applied.

In the United States, these crucial decisions are ultimately handled by the courts and federal judges.

Gary Gensler and Sam Bankman-Fried

It cannot be overlooked that Gensler and Sam Bankman-Fried worked together closely while SBF was still crypto’s golden child. Gary Gensler and SBF had held private meetings before the eventual collapse of the FTX crypto exchange. 

It’s speculated that SBF was liaising with Gensler to build a regulatory moat around FTX and monopolize crypto trading in the U.S. Conspiracy theories linking Sam Bankman-Fried’s political donations to public servants are commonplace, yet nothing has been confirmed.

Many crypto investors are also quick to point out that Gensler is more interested in hunting down Ripple executives like Brad Garlinghouse than bringing alleged criminals like SBF to justice.

On the Flipside

• Despite his reputation and perception within the wider crypto industry, Gary Gensler has had a prestigious and successful career in finance and government.
• He may be on a mission to bring tougher regulations to cryptocurrency; however, if you live outside of the United States, you shouldn’t experience any first-hand implications from his behavior.

Why You Should Care

As the Chairman of the SEC, Gensler is heavily involved in how crypto is regulated in the U.S.

FAQs

What is Gary Gensler’s net worth?

According to Bloomberg, Gary Gensler has an estimated net worth of as much as $119 million.

Who was the SEC Chair before Gensler?

Before Gary Gensler was nominated for the role, the SEC Chair position was held by Jay Clayton.

Who controls the SEC?

Five individuals head the U.S. Securities and Exchange Commission. Each member is nominated by the President and confirmed by the U.S. Senate. The President then designates one commission member as the Chair.