Gary Gensler Leaves SEC – How Will It Impact Crypto Market?
Last Friday, the chairman of the US Securities and Exchange Commission Gary Gensler officially stepped down and left the office for good. After his final day in the office took place, the crypto community celebrated and the XRP army in particular. Ripple’s top managers – the chief legal officer (CLO) Stuart Alderoty and chief technology officer (CTO) David Schwartz – made acid and triumphant comments regarding his departure.
Since Ripple was not the only cryptocurrency company which the SEC under Gensler’s rule witch-hunted, the community now expects drastic changes in the crypto space, hoping they will be nothing but positive.
Brief Recap of Gensler’s SEC Tenure
It seems to many crypto fans and workers of the crypto space that Gensler’s resignation on Friday has finally put an end to a tenure that left a hard-suffered mark on the cryptocurrency space since he took office in early 2021. Gensler’s approach to crypto regulation was harsh and often referred to as “regulation through enforcement.” Now that this man is gone from the SEC, his departure sparked a speculation about the potential impacts it may have on the cryptocurrency industry.
His last day came just days after the SEC filed an appeal against the historic ruling of the federal judge in the Ripple-SEC case, which defined XRP as a non-security in retail sales. Still, the majority of crypto enthusiasts and experts seem to be feeling optimistic since not only Gensler has resigned but also the inauguration of Donald Trump is taking place on Monday, January 20. The latter signifies that the newly-elected president may start working on fulfilling his pre-election pro-crypto promises.
Upon taking on the position as the SEC chairman at the start of 2021 after the previous chairman Jay Clayton unleashed the lawsuit upon Ripple, the community hoped that he would definitely stop the legal attack on the blockchain giant and its two top executives – Chris Larsen and Brad Garlinghouse – since Gensler was regarded as an expert in blockchain and crypto due to his rich background as a former professor at MIT who taught numerous courses on those subjects.
Many hoped that Gensler’s leadership would bring clarity and improve crypto regulation.
SEC Drives Crypto Projects Out of USA
However, he would not live up to those positive expectations and his tenure became associated with tough enforcement actions as he and his team interpreted security laws rigidly, leveraging them to attach crypto companies and coins.
With Gensler in power, the SEC began targeting multiple crypto firms, claiming that the tokens they traded and offered to investors violated securities laws and regulations in the USA. High-profile legal cases initiated by the SEC against Ripple, Binance, Coinbase were flashing in headlines and created the overall feeling of uncertainty dominating the crypto space. Gensler’s stance under which all cryptocurrencies, except for Bitcoin and Ethereum, were nothing but securities under the US laws. This created widespread fear among crypto companies and investors. Many stated that such an aggressive approach stifled crypto innovation, making crypto projects leave the US for more crypto friendly jurisdictions, which was damaging for the US reputation as a leader in the tech area.
One of the key moments of Gensler’s leadership at the SEC was the continuous case against Ripple. In July 2023, the federal judge ruled that XRP, the Ripple-affiliated cryptocurrency did not fall under the definition of a security when sold to retail investors. The crypto community and Ripple celebrated this decision as a victory not only for Ripple but for the whole cryptocurrency space.
However, as a final act as chairman, Gensler drove the agency to file an appeal, which signified SEC’s decision to persistently fight until the end. Curiously, after the election Donald Trump said that he would fire Gensler from the SEC one day one of his presidency. Gensler resigned after that in November, saying that he would only stay until January 2025.
Crypto Community’s Expectations from Trump’s Presidency
One of the most striking pro-crypto promises made by Donald Trump during his election campaign was the creation of a US Strategic Bitcoin Reserve. This step would potentially turn Bitcoin into a national strategic asset and it would gain a role similar to that of gold in conventional financial systems. Trump suggested buying Bitcoin and stockpiling it, aiming to show the US’s commitment to make cryptocurrency an integral part of the US financial infrastructure. Bitcoin advocates around the world danced with joy from this announcement, believing that this would strengthen Bitcoin’s legitimacy as a global reserve asset.
However, the cryptocurrency community remains uncertain about the next SEC chairman which has not been appointed yet and what his/her position on cryptocurrencies and crypto regulation would be. Still, with the president openly sharing his pro-crypto stance, the cryptocurrency industry already seems to be much safer than before and much more certain regarding its bright future in the US.
