Crypto Long & Short: Professor Gary Gensler vs. SEC Chair

Crypto Long & Short: Professor Gary Gensler vs. SEC Chair

The Changing Sentiment Towards SEC Chair Gary Gensler: Insights from a Blockchain Course

If you were to ask the crypto community about the individuals they have taken issue with this year, it’s likely that U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler’s name would be near the top of the list. A quick search on social media would give you a sense of the sentiment currently held towards him. However, it’s important to approach this topic with a fair and balanced perspective.

Personally, I started out as a supporter of Gensler, as I had come across his name during my exploration of blockchain technology through Massachusetts Institute of Technology’s (MIT) “Blockchain and Money” course. Despite not attending MIT, I had the opportunity to take the course online for free. It was a comprehensive and informative course that I would recommend to anyone interested in cryptocurrencies.

When Gensler was appointed as the SEC chair in April 2021, I, like many others, was hopeful that his knowledge and understanding of blockchain technology would bring positive changes to the industry. However, over the past two years, it seems that the sentiment has shifted. As a result, I decided to revisit the course and specifically focused on Lecture 8, which delved into public policy.

In Lecture 8, Gensler’s past statements and present actions seemed to align. He emphasized the need to guard against illicit activities, ensure financial stability, and protect investors. It appears that Gensler believed there was a broad consensus on the need to curb illicit activity but found inconsistency in the implementation of policies to achieve this goal.

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This is where the SEC is attempting to make waves by establishing a framework of implementation that can be emulated globally. While some may argue that the SEC is being too aggressive, it is important to acknowledge the SEC’s efforts to protect investors and maintain the integrity of the market.

One interesting aspect from the lecture was the classification of Bitcoin (BTC) and Ethereum (ETH) as crypto cash commodities, rather than securities. This aligns with the SEC’s previous determinations that a significant portion of the crypto market is not considered securities. However, Gensler’s recent comments on this matter, especially regarding Ethereum, seem less definitive.

Another significant point discussed in the lecture was the viability of regulating crypto intermediaries. The lecture touched upon the historical attachment of laws to intermediaries, citing systemic risk and the relative ease of regulating intermediaries compared to smaller entities. Recent SEC enforcement actions against Coinbase and Binance, accusing them of operating as unregistered securities exchanges and brokers, highlight the SEC’s focus on regulating intermediaries.

However, one disheartening revelation from the lecture was the emphasis on messaging and coalition building in public policy development, rather than in-depth analysis. This mismatch between the crypto community’s focus on the benefits of digital assets and the policymakers’ messaging-driven approach has led to a contentious relationship between the two groups.

In conclusion, revisiting Lecture 8 of the “Blockchain and Money” course provided valuable insights into Gensler’s approach to public policy. While the sentiment towards Gensler may have changed within the crypto community, it is crucial to acknowledge the SEC’s efforts to protect investors and promote financial stability. Understanding the complexities of the blockchain industry requires a balanced perspective that considers both the benefits and challenges associated with this transformative technology.

Takeaways

Here are some additional news worth reading:

• DOLLAR BILLS: Delving into the world of crypto as a journalist requires knowledge beyond just cryptocurrencies. Understanding topics such as corporate restructuring, accounting, and foreign exchange is crucial. This article explores the relationship between crypto and the U.S. dollar, focusing on global liquidity, risk appetite, and correlations.

• XRP TIME?: The XRP token and its associated blockchain have long been considered a solution for removing friction in the global financial system, particularly for cross-border remittances. However, after being classified as a security by U.S. regulators in 2020, major exchanges delisted it. Recently, Ripple, the company behind XRP, won a qualified victory in court, leading to a change in exchanges’ stance. The question now is whether XRP can achieve its goal of facilitating efficient cross-border transactions.

• DIGITAL BONDS: While many blockchain initiatives in traditional finance have failed to materialize, there are promising signs of progress in the digitization of conventional financial products. This article explores the potential for digital bonds, specifically U.S. Treasuries, to gain traction in the financial industry. Although still in its early stages, digital bonds are showing potential for innovation.

By analyzing these news stories, we gain a broader understanding of the current developments in the blockchain industry and its intersection with traditional finance.

Edited by Nick Baker.

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