U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler defended the SEC’s approach to enacting securities laws on digital assets, sticking to his regulatory guns despite calls from the cryptocurrency industry and mounting political pressure. Gensler told a recent financial technology conference in Las Vegas that the SEC would ensure that investors were protected and that people were complying — significantly as the U.S. presidential election grew near. Gensler’s remarks coincide with increased scrutiny of cryptocurrency by political leaders and the digital asset sector, and he said he firmly believes digital assets should be subject to the same rules as other markets.
Appointed by President Joe Biden in 2021, Gary Gensler has come under fire for what critics call “regulation by enforcement” primarily aimed at the crypto industry. They say the approach has contributed to the uncertainty in the crypto market since crypto companies are subject to enforcement action without clear regulatory guidance. However, Gsensler says cryptocurrency companies must play by the rules of the existing securities framework, requiring compliance to protect investors.
The SEC chair’s stance has sparked bipartisan unhappiness. A current 2024 presidential candidate, former President Donald Trump, has publicly vowed to remove Gensler if he is reelected. However, Gensler says that, while some in Vice President Kamala Harris’ circle support such measures, he will not resign because the appointment and removal of SEC leadership is the president’s decision.
Ripple CEO Calls for Collaborative Crypto Regulation
The cryptocurrency sector continues to express frustration over the SEC’s regulatory approach, with industry leaders calling for clearer compliance guidelines. Ripple CEO Brad Garlinghouse has made several statements regarding the harsh conditions the industry is required to endure under the current SEC administration. However, there is still a long way to go regarding significant regulatory hurdles. Garlinghouse argues that more precise regulatory standards could provide the path to more incredible innovation and stability within the industry.
At DC Fintech Week, Garlinghouse discussed what regulatory pressure has been like on his business, with an anecdote about how Citigroup shut down an account of his because of his ties to cryptocurrencies. The Ripple CEO believes his case is the extreme model of crypto leaders being held to an added measure of scrutiny throughout the broader monetary realm. ‘We need a more collaborative approach from the next U.S. administration regarding regulation,’ he said, ‘which would help create better growth for the digital asset space if it entered into a partnership with regulators.’
Garlinghouse and other industry figures are racing to engage with potential new leadership in the U.S. election, advocating for an improved regulatory environment to enable the digital assets industry to be better. He added that the future of crypto regulation in the U.S. would depend on who is appointed to serve as SEC chair and Treasury Secretary down the road. However, not all experts see political promises around crypto as definite policy positions; instead, they see them as tactical moves to play to the crowd.
Gary Gensler Faces Uncertain Future Amid Crypto Tensions
Meanwhile, the SEC chair’s future in a new administration is unclear—with Trump and Kamala Harris signalling dissatisfaction with Gensler. Nevertheless, Gary Gensler still intends to remain chairman and assure his colleagues that the SEC’s mission to safeguard investors will not change. He said political transitions may impact regulatory agencies, but the SEC’s work has to go on within the confines of existing laws.
Given this political backdrop, Gary Gensler justified the SEC’s regulatory position, stating that the agency’s actions are within its mandate to guard against investors and uphold compliance across markets, including digital assets. In response, Gensler has argued that elected leaders still have the power to appoint or remove SEC chairs because their jobs will change with the election results.
Uncertainties about the future of U.S. cryptocurrency regulation are echoed in the ongoing debate about Gary Gensler’s regulatory approach. Industry leader Garlinghouse is keen to see a regulatory framework that encourages innovation but protects the investor. Meanwhile, Gary Gensler has held firm, arguing that the current administration needs to ensure lists of existing securities laws are applied to oversee digital assets until a new administration can enact new, clearer rules.
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