- SEC Chair Gary Gensler’s evolving stance on crypto: from a broader perspective in 2018 to a more focused view in recent years.
- Gensler’s strategic mastery of media and politics in influencing the crypto narrative.
June, a time synonymous with sun-soaked days and seasonal footwear, seems to have influenced the fashion choices at the Securities and Exchange Commission. Recent revelations suggest a symbolic ‘flip-flop’ in views, notably those of the SEC Chair, Gary Gensler. A 2018 video shows Gensler definitively classifying bitcoin, ether, litecoin, and bitcoin cash as “not securities”. However, in a stark contrast, Gensler voiced a narrower view in a recent interview, asserting that “everything other than bitcoin” is considered a security.
The so-called “Hinman documents,” critical evidence in the SEC vs. Ripple lawsuit, further add to the confusion. These documents unveil discussions among SEC officials about a “regulatory gap” in securities law concerning digital asset classification. This lack of consensus contrasts with Gensler’s public declaration that crypto platforms are essentially securities exchanges falling under the SEC’s jurisdiction. Gensler argues that crypto markets suffer more from a lack of regulatory compliance rather than clarity.
Interestingly, 2018 was also the year when Gensler made a presentation to hedge funds, stating that
“Three-quarters of this market is probably not securities,”
referring to the big four digital assets of the time: bitcoin, ether, litecoin, and bitcoin cash.
The question that arises is – what happened in the interim? What led Gensler from stating
“Three-quarters of this market is probably not securities”
to claiming that
“Everything but bitcoin”
is a security? Is this shift reflective of Gensler’s change of heart or a calculated move to expand his political reach within Washington’s power circles?
Gensler’s history reveals a knack for political navigation and media engagement. Rising to be a partner at Goldman Sachs at 30, Gensler then transitioned to a role as the Assistant Secretary for Financial Markets under the Clinton administration, gaining firsthand policy-making experience.
Now, as the head of SEC, Gensler appears to focus his enforcement actions strategically, maintaining a stern narrative around the crypto industry rife with
“Hucksters. Fraudsters. Scam artists. Ponzi schemes.”
His ability to command mainstream narrative is evident, with his notable legal action against Kim Kardashian, who was charged for undisclosed paid promotions for the crypto platform EthereumMax.
Gensler’s tactical media manipulation extends beyond drawing attention away from other pressing issues like ESG and market structure reforms or major bank collapses. He effectively diverts the media spotlight towards crypto, simultaneously fostering a strong reputation as a strict regulator among progressive circles.
His political strategy also includes building strong relationships with influential figures in both the Senate and the House. This network extends from Senator Sherrod Brown, a known crypto critic, to Senator Elizabeth Warren, who recently pledged to form an “Anti-Crypto Army.” His influence has permeated the House Financial Services Committee, leading to his views being echoed in internal memos and committee hearings.
Gensler’s strategic approach to digital assets might seem like a threat to the industry. However, for Gensler, it may just be another move in his political chess game, potentially paving his way towards higher office. The ultimate fate of Gensler’s crypto strategy, however, lies in the hands of Congress and the courts.