Obama-era veteran returns! Tough regulator Gary Gensler rumored to take over as SEC chairman

Gary Gensler, former chairman of the Commodity Futures Trading Commission (CFTC) during the Obama administration, is set to be appointed by the new President Biden as the chairman of the U.S. Securities and Exchange Commission (SEC). Despite Gensler's deep understanding of blockchain, it remains to be seen whether this will be a long-term positive for the cryptocurrency industry.

"Dodd-Frank Act" Key Driver

According to an anonymous source cited by Reuters, 63-year-old Gary Gensler is set to take over as the SEC chairman, following Jay Clayton, who has led the SEC since May 2017 and stepped down early after accusing Ripple of selling unregistered securities.

Gensler served as the chairman of the U.S. Commodity Futures Trading Commission (CFTC) from 2009 to 2014 during the Obama administration. He was also one of the key drivers behind the Dodd-Frank Act and a former Under Secretary of the Treasury, actively involved in the post-2008 financial crisis recovery efforts.

During his tenure at the CFTC, Gensler led reforms in the core markets that led to the financial crisis, fundamentally transforming the U.S. derivatives trading market. Both the Wall Street Journal and the New York Times have described the regulations he promoted as tough and resilient. Market expectations are generally that under Gensler's leadership, regulatory oversight may become stricter in the future.

Previously Labelled Bitcoin and Ethereum as Securities

Gensler was invited to participate in a blockchain summit in 2018, where he explicitly stated that the cryptocurrency market is highly volatile and that Bitcoin, Ethereum, and Ripple are fundamentally categorized as securities. He also shared his views on blockchain technology:

The success of blockchain requires a significant reduction in verification and operational costs. If this cannot be achieved, it is still recommended to use traditional technology, but I believe there are still many benefits to be pursued.

While he pointed out that Bitcoin is a security and has issues in efficiency, verifiability, and privacy, he believes that these issues will be addressed within a few years.

Overall, if Gensler assumes office, the first area he may focus on is ICOs. He previously stated that around 25% of ICO projects involve fraudulent activities, a figure that media outlets estimate as high as 80%. Regardless of whether it's 25% or 80%, to Gensler, these are alarmingly high fraud rates. He emphasized the need for countries to enact relevant regulations to protect investors.