Outgoing SEC Chair Gary Gensler Grilled About His Tumultuous Reign as Crypto Regulator

Outgoing U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler was in the hot seat in Tuesday interview as he was grilled about the financial regulator's litigation-first policy under his rule.

Outgoing U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler faced grilling over the financial regulator's litigation-first policy during his tenure in a Tuesday interview.

Gensler defended the SEC's actions, describing it as "a law enforcement agency" tasked with protecting investors from fraud, manipulation, and other securities law violations.

Bitcoin and the SECバトル

During the CNBC interview, host Joe Kernen highlighted the SEC's stance on Bitcoin, stating that Gensler either "stood in the way of a totally new industry, or you were unable to prevent a huge bubble from forming, which is going to end very badly, and neither one is going to be much of a legacy to look back on."

Gensler maintained that he never labeled Bitcoin a security, but asserted that "these 10,000 or 15,000 other tokens" have "hurt" investors for years.

Kernen further noted that if Bitcoin had a hard time evolving under Gensler's SEC, "it's very difficult for anything good to happen," suggesting that the previous SEC leadership, including Gensler, appeared to put up multiple obstacles in the crypto industry's path.

Gensler mentioned being on the job for only a few months when Bitcoin exchange-traded funds (ETFs) based on futures were approved. However, Kernen quickly countered with a battle-ready response, stating, "After a lawsuit."

Kernen's words carry significance, considering how spot Bitcoin ETFs took a decade before finally being approved in January 2024, following a lawsuit that appeared to pressure the regulatory agency into approving the funds. Several months later, ETFs for Ethereum were also approved.

Other Digital Coins and the SEC Scanner

Gensler maintained that other digital currencies beyond Bitcoin are not compliant with securities laws and hence require oversight.

"A sector of this field, crypto, the investing public is investing based on projects and these things. I'm not prejudging any one of them, but many of them are covered by the securities laws. And in that field, there's a lot of noncompliance," he said.

It's worth noting that Gensler has faced criticism from many in the crypto space for not being clear on the legal status of Ethereum, even when asked under oath. After ETH ETFs were approved, Gensler still did not provide clarity on whether Ethereum is a security or a commodity. It remains to be seen whether the new leadership will give clarity on this matter.

Gensler on Bitcoin's Future and Other Coins' Utility

Despite describing BTC as a highly speculative and volatile asset, Gensler expressed his belief in a future for the world's largest cryptocurrency by market capitalization if a majority of the world's population wants to trade it.

" I think that Bitcoin is a highly speculative, volatile asset. But with 7 billion people around the globe, if they want to trade it just like we do have gold for 10,000 years, we have Bitcoin. It might be something else in the future as well," Gensler said.

As for the thousands of other coins in the crypto market, Gensler believes they need to prove their utility. According to him, they have to "show that they actually have fundamentals underlying them or they won't persist."

Gensler will step down as SEC Chair on January 20, during incoming President Donald Trump's inauguration. Trump has nominated former Commissioner Paul Atkins to replace him.

Atkins' nomination was met with optimism from crypto users – both small-time holders and key industry players – as he is expected to usher in a more positive and progressive approach toward regulating digital assets.