SEC Chair Gary Gensler, who led US crackdown on cryptocurrencies, to step down

Securities and Exchange Commission Chairman Gary Gensler, who has been aggressive in his oversight of cryptocurrencies and other financial markets, will leave his position on January 20.

Gensler pushed for changes that he said protected investors, but the industry and many Republicans were wary of what they saw as going too far.

President-elect Donald Trump had promised during his campaign that he would impeach Gensler. But Gensler on Thursday announced that he would leave office on the day Trump is inaugurated.

Bitcoin has jumped 40% since Trump’s victory. On Thursday, the price reached new highs and approached $100,000. Bitcoin moved significantly higher after Gensler’s resignation was announced.

Gensler’s position on the rise of cryptocurrencies was captured during a speech he gave during the first year of his presidency in 2021, where he described the market as “the Wild West.”

“This asset class is rife with fraud, scams and abuse in certain applications,” he said in a speech at the Aspen Security Forum. “There is a lot hype and spin about how crypto assets work. In many cases, investors are unable to obtain rigorous, balanced and complete information.”

Under Gensler, the SEC brought actions against players in the crypto industry fraudwash trading and other violations, including last month when the commission filed fraud charges against three companies posing as market makers, along with nine individuals for attempting to manipulate various crypto markets.

Still, access to cryptocurrencies became more widespread under Gensler. In January, the SEC approved exchange-traded funds that track the spot price of bitcoin. Such ETFs would allow investors to more easily access bitcoin without the massive overlays required to purchase it directly.

However, Gensler acknowledged that the SEC had rejected previous similar applications for such ETFs, including Grayscale Bitcoin Trust, one of the first to ultimately be approved by the SEC.

“However, circumstances have changed,” Gensler said, pointing to a ruling by the U.S. Court of Appeals for the District of Columbia that found the SEC failed to adequately explain its reasoning in rejecting Grayscale’s proposal to lay.

Even there, Gensler was careful not to endorse the benefits of bitcoin. He pointed out how ETFs containing precious metals track the prices of things that “consumer and industrial users have, while Bitcoin, on the other hand, is primarily a speculative, volatile asset that is also used for illegal activities, including ransomware, money laundering money, sanctions evasion and terrorist activities. financing.”

Gensler was tested early in his tenure by the rise of the meme stock phenomenon that shook the financial system in early 2021. Earlier this year, the SEC under Gensler urged Wall Street to speed up the time it takes for stock trades to settle. of the areas where Commission staff recommended changes following the Commission’s calculation GameStopone of the first meme stocks.

In the depths of the COVID-19 pandemic, hordes of small and novice investors suddenly piled into the struggling video game retailer’s stock. During the height of the frenzy, several brokers banned customers from buying GameStop after the clearinghouse that settled their trades demanded more cash to cover the increased risk caused by the highly volatile price.

In May 2024, new rules required broker-dealers to fully settle their trades within one business day of the trade date, up from the previous two.

Critics of the SEC under Gensler have called many of the agency’s proposals overly burdensome.

For example, the investment industry is opposing a proposal to force some advisors and companies to make more disclosures about their environmental, social and governance practices, known as ESG. Critics say the proposal is too complex and increases the risk of investor confusion, while imposing unnecessary burdens and costs on funds.

On Thursday, Gensler maintained the SEC’s track record under his leadership.

“The staff and the Commission are very mission-driven, focused on protecting investors, facilitating capital formation and ensuring markets work for both investors and issuers,” Gensler said in prepared remarks. “The staff consists of real civil servants.”

Gensler previously served as chairman of the U.S. Commodity Futures Trading Commission and led the Obama administration’s $400 trillion swap market overhaul. He also served as a senior advisor to U.S. Senator Paul Sarbanes in the writing of the Sarbanes-Oxley Act (2002) and served as Undersecretary of the Department of the Interior and Assistant Secretary of the Treasury from 1997 to 2001.