Many of us probably got our first exposure to Gary Gensler when we followed his free MIT Blockchain Economics course on YouTube. This course is fantastic and I consider the topics discussed within to be necessary for a fundamental understanding of cryptocurrency economics. What all of us probably took away from that course, regardless of our philosophies, is that Gensler knows what he is talking about.
While many of us were probably aware of Gary Gensler’s history as a Goldman Sachs banker, most of us were likely not aware of his direct role in the 2008 market crash: in his role as a Goldman Sachs banker, Gensler was a critically important lobbyist who was successful in relaxing the restrictions on the derivatives that led to the 2008 crash.
The following year, in 2009, Gensler was appointed head of the CFTC by Obama and was tasked with drafting tighter rules on derivatives trading – the same rules he helped overturn a year earlier.
Gensler isn’t the first Goldman Sachs banker/lobbyist turned politician – in fact, it seems to be the natural career progression.
Gensler has, to date, not offered comment on the potential for approving a bitcoin ETF, a pending decision that many in the crypto market are anxiously awaiting. If I were to speculate, I’d imagine they are holding out for the passing of regulation, as it seems that they are trying to pass a sweeping bill to encompass as many aspects as possible. A Bitcoin ETF cannot be avoided indefinitely and is an inevitability; it will also mark one of the most bullish events to date.
What little I think can be inferred from this information is that Gary Gensler is ultimately pushing for regulations that will benefit the establishment, not you and I (I mean, did anyone honestly think it would?): that’s why he was given the job. Recently, he has made some alarming statements regarding the potential classifications of cryptos (see below), which will likely impact 99.9% of projects negatively in the short-term.
While we should rejoice and celebrate the legal legitimization of crypto, prepare for it to be a long and messy journey with big downs and bigger ups. As always, be intelligent when you invest, and always keep an emergency fund and cash stack handy for a rainy day sale.
As regulation looms closer, I leave you with some direct quotes, from Gensler himself, to keep in mind:
Gensler refers to Bitcoin as a commodity, not a security (2021):
“To the extent that somebody is offering an investment contract or security that’s under the SEC’s remit, and they have exchanges that operate there, then we have to make sure there’s investor protection. If it’s not that, and it’s a commodity, as Bitcoin has been deemed to be, then it’s either a question for Congress … or it’s possibly a question for the Commodity Futures Trading Commission,” said Gensler.
Gensler speculates on XRP and Ethereum’s potential classification as a security (2018):
“There is a strong case for both of them – but particularly Ripple – that they are non-compliant securities, because these cryptocurrencies were sold by their creators and purchased primarily as investments for speculative reasons.”
"We need additional Congressional authorities to prevent transactions, products, and platforms from falling between regulatory cracks,"
"Certain rules related to crypto assets are well-settled. The test to determine whether a crypto asset is a security is clear,"
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