Key Highlights :
As the world of crypto continues to evolve, so too does the regulatory environment surrounding it. This has been especially true in the United States, where the Securities and Exchange Commission (SEC) has been at the forefront of crypto regulation. At the helm of the SEC is its current chair, Gary Gensler, who is tasked with ensuring that the crypto industry is regulated in a way that protects investors and promotes innovation. But just how much power does Gensler have when it comes to crypto regulation?
The answer is complicated. While the SEC is the primary regulator of crypto in the U.S., it is not the only one. The Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) also have a role to play. In addition, the U.S. Congress has passed legislation that gives the SEC additional authority over certain aspects of crypto, such as the regulation of Initial Coin Offerings (ICOs).
The power of the SEC chair is further complicated by the fact that the SEC operates as a five-member commission. This means that Gensler, while he may have a significant amount of influence, does not have the final say when it comes to crypto regulation. Instead, the SEC operates on a majority-rule basis, with the five commissioners voting on any proposed rule changes.
That said, Gensler has been a strong advocate for crypto regulation since his appointment as chair in 2021. He has spoken out in favor of increased regulation, including the need for exchanges to register with the SEC and to adhere to certain anti-money laundering (AML) rules. He has also been vocal in his support of the SEC’s recent enforcement actions against companies such as Ripple, which have been accused of selling unregistered securities.
The SEC’s recent enforcement action against Sam Bankman-Fried is a prime example of Gensler’s influence. Bankman-Fried is the CEO of FTX, a crypto derivatives exchange, and was charged with fraud, illegal political donations, and bribery of the Chinese government. His lawyers claim that prosecutors have yet to produce over 3.6 million documents related to the case, prompting Bankman-Fried’s lawyers to ask the court to adjourn the trial date.
The SEC’s enforcement action against Bankman-Fried is a sign that Gensler is serious about regulating the crypto industry. He is also pushing for the SEC to take a more active role in regulating the burgeoning artificial intelligence (AI) sector, as evidenced by the recent news that Perella Weinberg, the investment banking firm on retainer to FTX, has been “teasing the sale of hundreds of millions of dollars of shares” in AI startup Anthropic to potential investors.
Ultimately, while Gensler may not have the final say when it comes to crypto regulation, he is certainly a driving force behind it. His willingness to take a hard stance on enforcement and his advocacy for increased regulation make it clear that he is committed to protecting investors and promoting innovation in the crypto space. As such, it is likely that Gensler will continue to be a major player in the crypto regulatory landscape for the foreseeable future.