Gary Gensler’s tenure as the Securities and Exchange Commission’s (SEC) chair is drawing to a turbulent and unexpected close. His time was marked by numerous battles with the cryptocurrency industry as the SEC pursued a flurry of enforcement actions and lawsuits against U.S.-based companies.
Gensler, who once lectured on blockchain and digital assets at MIT, often labeled the cryptocurrency sector as a “Wild West” full of scammers. His approach to regulation earned him staunch critics, with many accusing him of overstepping his authority.
One major contentious issue was Gensler’s reluctance to approve spot Bitcoin exchange-traded funds (ETFs)—with applications from prominent players like BlackRock facing repeated delays. The SEC’s stance took a hit when the court ruled it had not provided sufficient justification for rejecting an ETF proposal by Grayscale.
A major criticism during Gensler’s leadership was the SEC’s reliance on enforcement—a strategy that frustrated exchanges, with Coinbase becoming a vocal opponent. In April 2023, the exchange received a Wells notice from the SEC, accusing it of listing securities without proper registration.
Coinbase contended that the SEC thoroughly reviewed and approved these same practices during its initial public offering in 2021. Despite offering proposals to comply with regulations, Coinbase claimed the SEC failed to provide clear guidance. At the time, the company lamented the worsening regulatory uncertainty in the crypto space.
This ambiguity and lack of direction had far-reaching effects. Many U.S.-based crypto firms relocated to jurisdictions with more favorable regulatory environments. For instance, FTX, which later collapsed in a high-profile scandal, operated from The Bahamas, beyond the SEC’s reach.
Gensler faced sharp criticism following FTX’s downfall, particularly because he had previously met with its founder, Sam Bankman-Fried. Some politicians even blamed him for regulatory lapses that allowed FTX to defraud investors.
Despite the controversies, Gensler’s defenders argue that some enforcement actions under his leadership helped protect consumers. For example, the SEC cracked down on celebrities promoting questionable cryptocurrencies, which may have shielded retail investors from scams.
The announcement of Gensler’s departure was met with mixed reactions. Some industry leaders expressed open disdain, with Kraken co-founder Jesse Powell calling him a “clown” and others sharing their frustrations on social media.
As the crypto industry looks ahead, the focus shifts to who will take over as SEC chair. Many hope the next leader will adopt a more balanced approach, fostering innovation while ensuring consumer protection. The growing demand for Ether and Bitcoin ETFs and the potential for funds tracking smaller cryptocurrencies could signal a new era for the industry.
That new era is what industry actors like Riot Blockchain Inc. (NASDAQ: RIOT) are watching to see what form and shape it takes.
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