Gary Gensler stands firm on the SEC’s enforcement approach

US Securities and Exchange Commission (SEC) Chairman Gary Gensler appears to have doubled down on the agency’s tough stance on cryptocurrency regulation.

In a recent Bloomberg interview, he reaffirmed that the SEC will continue its much-maligned enforcement-led approach rooted in existing securities laws despite growing backlash from the crypto industry and lawmakers.

Commission stands firm on crypto regulation

Speaking with Ed Ludlow and Caroline Hyde on Oct. 22, Gensler reiterated that the commission’s top priority remains investor protection. He cited several cases where people lost money in the crypto market due to poor disclosure practices while asserting that decentralized technologies are not inconsistent with established securities regulations.

The SEC’s approach has caused controversy, with many criticizing the regulator for stifling innovation by relying on outdated rules, particularly the Howey test, which was first used in 1946. The authority regularly applies the test to determine whether a cryptocurrency transaction qualifies as an investment. contract, which would subject it to US securities laws.

Despite the condemnation, Gensler has remained steadfast, stressing that regulations based on historical precedent offer the best way forward to protect crypto investors while promoting the integrity of the industry.

In addition, the agency has stated its intention to continue to closely monitor cryptography. Its examination division recently published its priorities for 2025, highlighting local exchange-traded products (ETP) for Bitcoin and Ethereum as key areas of interest.

This specificity is a marked departure from previous years, when the regulator only referred to crypto broadly without highlighting individual products.

Questions about the future of Gensler

Criticism of the former MIT professor’s stance on crypto has spilled over into politics. However, in the Bloomberg interview, he managed to dodge questions about his future at the helm of the SEC if Donald Trump returned to the White House.

Although his term does not end until 2026, there is a belief that the 2024 election could potentially affect the makeup of the financial watchdog’s top staff, with Gensler particularly in the spotlight.

Trump has publicly stated that he would fire the head of the commission “on day one,” calling the Democratic nominee’s tenure “disastrous” for crypto. The 67-year-old declined to engage in speculation, but acknowledged that any change in leadership would require Senate approval.

If the Republican presidential hopeful were to win, he could replace Gensler with someone seen as more amenable, such as Commissioner Hester Peirce, a long-term proponent of a more crypto-friendly regulatory approach.

Conversely, some experts think that while a Kamala Harris win may not immediately remove Gensler from the picture, it could still lead to a softer stance on the industry.

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