In the weeks leading up to President Joe Biden’s presidential inauguration, the American people saw the president’s nominations for his cabinet and other parts of the government. And one of those nominees is Gary Gensler who will head the United States Securities and Exchange or SEC.
The SEC is the government agency meant to protect investors and the national banking system by enforcing federal security laws and regulating the securities industry which includes cryptocurrency.
The New Head of the SEC
Gary Gensler is a former investment banker having worked for Goldman Sachs for over 20 years, and was the chairman for the Commodity Futures Trading Commission (CFTC) under President Obama. Gensler is also a professor of the Practice of Global Economics and Management at MIT Sloan where he teaches courses about blockchain technology and serves as an adviser to the Media Lab’s Digital Currency Initiative.
For too long, our banking regulators have behaved like they work for the financial institutions they regulate – not the American people. But big change is coming. President-elect Biden couldn't have made two better picks to lead the SEC and CFPB: Gary Gensler and Rohit Chopra. https://t.co/tL2G02RTuU
— Elizabeth Warren (@SenWarren) January 18, 2021
As it turns out, Gary Gensler is very knowledgeable and deeply interested in cryptocurrency and its aspects: the ecosystem around crypto, the technology, and the business around it.
Gary Gensler understands cryptocurrency very well, and in 2018, said that Ether and Ripple “have most likely been issued and traded in violation of American securities regulation”. He would later go on to say that “there is a strong case for both of them — but particularly Ripple — that they are non-compliant securities”, and they will probably go under stricter scrutiny although Bitcoin will probably remain exempt; although some people strongly disagree with the lawsuit.
Forbes : #4 The SEC should withdraw its lawsuit against @Ripple.
With a new President, Congress, and SEC Chair, the US can reset its approach and win the cryptocurrency race against China. Here are five resolutions to achieve those goals. @bgarlinghouse https://t.co/Jj2N8ezS0E
— 𝗕𝗮𝗻𝗸 𝑿𝑹𝑷 (@BankXRP) January 15, 2021
This new regulation has already started to happen as the SEC is currently suing Ripple Labs for allegedly violating federal securities laws in selling XRP to retail consumers.
Gensler is in a good position to bridge the gap between cryptocurrency and federal securities laws. Jerry Brito, executive director of Coin Center, said “[Gesler is] very committed to securities laws and enforcing them”, as the current laws have an unclear relationship with cryptocurrencies and we could see a new wave of crypto regulations.
It’s still unknown exactly what the new regulations will be under the Biden administration, plus President Biden just froze all federal regulatory plans which included former Treasury Secretary Steve Mnuchin’s proposed crypto-wallet regulations so they can be further reviewed. We’ll have to wait and see what the next steps will be.
Laying Down the Foundation
Gary Gensler isn’t the only figure working towards regulating cryptocurrency as Senator Sherrod Brown (D-Ohio) is going to run the Senate Banking Committee for the next Congress session and he will focus on real-time payments and how to implement them. For example, post offices are being considered to provide certain financial services in the form of post banking.
And incoming Treasury Secretary Janet Yellen recently said illicit uses of cryptocurrencies are a “concern” and wants the government to find a way to stop money laundering in cryptocurrencies. Yellen believes that cryptocurrencies “…are used at least in a transactions sense mainly for illicit finance…”, so take that as you will.
Up in the Air
It’s difficult to say what exactly will happen to cryptocurrency in the near future. I think Gary Gensler will push cryptocurrencies further into the mainstream; however, there is a lot of political turmoil right now. The January 6 riots and some Republicans objecting to accepting the certified votes have made relations between the two parties awkward.
Personally, I do think regulations will pass since both parties have portrayed interested in doing so. Even if the Democrats don’t control the vast majority of seats, I think enough Republicans will agree and vote yes. I will for sure keep an eye on this story as it develops. Be sure to follow us on Facebook and Twitter. And join us on Discord and Telegram to discuss the latest events in the world of finance.