When Gary Gensler took over as chairman of the Securities and Exchange Commission (SEC) in 2021, it’s strange to look back on how the crypto-assets (virtual currency) industry perceived him. is. At the time, Mr. Gensler was seen as a breath of fresh air for an industry that was in dire need of change.

Gensler’s predecessor, Jay Clayton, appeared to have little interest in crypto assets, but Gensler taught a blockchain course at MIT. Mr. Gensler was sure to understand. And we believed that such a person would find a prudent path that balanced the need to protect existing laws with the need to enable growth in a promising industry.

But it was a big mistake.

These days, just about everyone in the crypto industry or related fields hates the SEC under Chairman Gensler. Many believe that he does not provide any legal clarity to token issuers. He does not support Congress creating new laws focused on crypto assets (just look at the agenda). He has often angered many people by promoting agendas that seem selfish and self-centered.

Fortune magazine took a deep dive into Gensler’s tenure at the SEC, fleshing out what many of us already knew in general terms. The article is excellent and worth reading, based on interviews with “current and former SEC and Commodity Futures Trading Commission (CFTC) officials at all levels, including more than 30 financial experts, politicians, and leadership.” There is. For those who are short on time, we will summarize some important points, especially in relation to crypto assets.

political animal

Gary Gensler is a regulator, but he acts like a politician.

Mr. Gensler previously served as chairman of the CFTC, leading the commission after the 2008 financial crisis. He lobbied to expand the CFTC’s powers through legislation enacted at the time, pushed for numerous new regulations, and created offices for CFTC employees across the country (many of which remain vacant due to budget constraints). ).

In 2016, he joined Hillary Clinton’s presidential campaign and later found himself with Democratic Sen. Elizabeth Warren of Massachusetts. Warren, then and now, is leading the charge to crack down on Wall Street and crypto assets.

It appears that Mr. Gensler is eyeing the post of Treasury Secretary. “Rumor in Washington, D.C., is that Mr. Gensler has been eyeing the Treasury secretary post since the Obama administration. That speculation was repeated in nearly every interview with Fortune magazine, but his allies consistently talked about it. “I avoided it,” said authors Leo Schwartz and Jeff John Roberts.

Gensler’s allies and critics alike agree on his ambitions. “Gary Gensler is a politician masquerading as a regulator,” Democratic Congressman Ritchie Torres, who supports the crypto industry, told Fortune.

Many rules have been proposed, but few have been adopted.

In the absence of new legislation from Congress, Mr. Gensler has looked to existing laws to regulate the financial sector. As a result, the SEC under Mr. Gensler’s leadership is making a flurry of rulemaking in a variety of areas, including how companies report their responsibilities on crypto assets and climate change. But many of them now appear mired in litigation and other challenges.

Fortune magazine reports:

“Finalizing the rules has been a headache for Mr. Gensler.In his first 30 months in office, Mr. Gensler has They submitted 62% and 91% more proposed rules, ranging from how broker-dealers use predictive analytics about their customers to overhauling parts of America’s trading system.

But such efforts require comment periods to solicit industry input, and Mr. Gensler’s ambitions have drawn pushback from across the financial world. Bloomberg reported in August that Gensler’s track record for rule adoption was the slowest in decades.

Meanwhile, Mr. Gensler’s enforcement actions have often been frustrated by lawsuits brought by companies targeted by the SEC. Ripple has (mostly) defeated attempts to classify XRP (XRP) as a security.

Now, Coinbase appears likely to be able to block another lawsuit alleging it operates an illegal stock exchange. Fortune magazine cited legal experts as saying Gensler’s aggressive approach could backfire. “Litigation over the SEC’s jurisdiction and other issues could undermine Mr. Gensler’s broader efforts if such litigation leads to judicial decisions that curtail the SEC’s authority,” the article said. the authors write.

A confusing turf war

Mr. Gensler led and developed the CFTC, but he is seeking to limit its authority when it comes to crypto assets. By arguing that most tokens other than Bitcoin are securities, Gensler is placing the onus on the SEC to determine how these tokens should or should not be regulated. The CFTC argues that some tokens are more properly commodities and should be regulated by the agency.

In other words, the “commodities versus security debate” is not just an issue for the crypto industry, but is also important to regulators, Schwartz said, and has often led to “discord between Gensler’s current and former organizations.” Roberts points out.

Speaking to Fortune, CFTC Commissioner Summer Mersinger cited the case of a Coinbase employee who was accused of insider trading. The CFTC attempted to file its own lawsuit based on the understanding that some of the tokens involved were commodities. The SEC also asserted its own jurisdiction, and Mersinger feared the case would be dismissed because it was unclear who had jurisdiction. Mersinger said the relationship between the SEC and the CFTC is currently “quite strained.”

One CFTC official told Fortune in even stronger terms.

“It’s like a very dysfunctional couple. The cooperation between our enforcement and their enforcement is basically gone.”

｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
｜Image: SEC Chairman Gary Gensler (Jesse Hamilton/CoinDesk)
｜Original text: ‘A Politician Masquerading as a Regulator’ – 3 Takeaways From Fortune’s Gary Gensler Profile