SEC Chairman Gary Gensler has reiterated his point critical view of the cryptocurrency industry when he will step down from the leadership role in less than two weeks. Appearing on Bloomberg TV on Wednesday, Gensler emphasized that the cryptocurrency market is “rich with bad actors” and “built around non-compliance.”
Besides Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, many other projects lack solid foundations, according to Gensler. He noted that the market is strongly driven by sentiment.
“I’ve never seen an area so 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.
Bad politics
When it comes to cryptocurrency regulations, Gensler said “there’s still work to be done,” as many people may not fully understand the risks of 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.
Prior to joining the SEC, Gensler served 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 that he has a great understanding of these currencies, especially Bitcoin.
The SEC chief also led 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 chairman.
He explained that in academia he could study and teach about the potential benefits of blockchain technology and new investment instruments. But now that he’s in a regulatory position, his focus has shifted to law enforcement and protecting investors.
Crazy law enforcement
Under Gensler’s leadership, the SEC initiated 100 crypto-related enforcement actions, adding up to 80 cases brought during former SEC Chairman Jay Clayton’s tenure.
Gensler’s tenure is also marked by legal action against many high-profile industry entities, including trading platforms such as Coinbase and Binance, or blockchain companies such as Ripple Labs, Consensys and Uniswap Labs. These are just a few of many.
With Gensler soon to step down, the SEC will welcome Paul Atkins as its new chairman. Appointed by President-elect Donald Trump, Atkins is known for his pro-crypto, pro-innovation stance. His approach is expected to emphasize 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 strong stance against spot Bitcoin ETFs, is expected to resign soon after the Senate Banking Committee suspended 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 its choice for chairman of the Commodity Futures Trading Commission (CFTC). Rostin Behnam, the current CFTC Chairman will leave his position on January 20, 2025.
Like the SEC, the CFTC also plays a major role in regulating the $3.5 trillion cryptocurrency market. The agency may have more power under the incoming Trump administration.
