The U.S. Securities and Exchange Commission (SEC) recently launched two major legal actions against Binance and Coinbase, accusing the exchanges of flouting U.S. securities laws. This offensive is led by Gary Gensler, who was appointed chair of the SEC in February 2021. Gensler’s stance on crypto has shifted from intrigue to hostility, as he recently declared that “we don’t need more digital currency…we already have digital currency, it’s called the U.S. dollar.”
Before his appointment, Gensler was teaching courses on digital currency at the Massachusetts Institute of Technology and consulting with that school’s Digital Currency Initiative. In December 2019, he wrote an op-ed for CoinDesk, saying “the potential to lower verification and networking costs is worth pursuing, particularly to lower economic rents and data privacy costs, and promote economic inclusion.” He also noted that “cryptocurrencies and blockchain technology have already prompted real change and can continue to do so.”
In March 2021, Gensler praised the transformative role of financial technology, saying that “markets – and technology – are always changing. Our rules have to change along with them” and that “financial technology can be a powerful force for good.” However, since his first year as head of the SEC, Gensler has been consistent in his stance that most cryptocurrencies fit the definition of securities, crypto exchanges need to register with the SEC, and stablecoins are “poker chips” for gambling on crypto.
Gensler has also called for Congress to take steps towards a clearer regulation framework for crypto exchanges, noting that “right now there’s not a market regulator around these crypto exchanges and thus there’s really no protection around fraud or manipulation.” Last fall, he said that the crypto industry has had all the clarity it even needed all along, and in April 2021 he conspicuously avoided answering whether he believes ether is a security or not.
Now, Gensler’s approach to crypto sounds openly hostile as he’s arguing that the rules as to what is and isn’t a security have been known and communicated to crypto fully. Talking to CNBC Tuesday, Gensler said “there’s been clarity for years” for crypto, and exchanges just “need to come into compliance.”