SEC Chairman Gary Gensler's 11 Key Takeaways on Regulation and Cryptocurrency in the Final Interview

Gary Gensler’s term as Chair of the (SEC) has officially ended. As he prepares to step down on January 20, 2025, interviews he has given to major media outlets such as CNBC and Yahoo Finance are drawing attention. In these interviews, Gensler detailed his positions on cryptocurrency regulation, capital market reforms, and judicial challenges to regulation. The contents include achievements during his tenure, unfinished tasks, and concerns about the next administration.

The Essence of Capital Market Regulation and Gary Gensler’s Philosophy

Gary Gensler clarified the core role of the SEC. His unwavering stance was that capital markets must operate under principles of investor protection and legal compliance. He posed the question, “How can we build trust in the capital markets without following facts and laws?” emphasizing the necessity of regulation.

Just as highway rules apply equally to all vehicles, Gensler argued that financial markets require consistent rules regardless of whether cryptocurrencies are involved. Actions taken against brokers-dealers like Robinhood exemplify the implementation of this philosophy. He demonstrated his commitment not to abandon regulatory roles until the end of his term.

Bitcoin, Other Tokens, and the Line of Regulatory Standards

Gensler’s stance on Bitcoin was particularly interesting. He explicitly stated that he does not consider Bitcoin itself to be a security and expressed a positive view on the approval of spot Bitcoin and Ethereum ETFs. He explained, “The general public has already had ample opportunity to invest in Bitcoin, and ETFs protect investors with lower fees and stricter regulations.”

However, his real concern was focused on thousands of other tokens. While Bitcoin and Ethereum account for 70-80% of the cryptocurrency market, the remaining tokens lack adequate disclosure information despite investors betting on or investing in projects. Tokens that should be regulated under securities laws but currently do not comply with regulations were a primary concern for Gensler.

Judicial Resistance and the Reorganization of Regulatory Policies

Regarding criticism that he lost four times in rule challenges, Gensler acknowledged a rapid change in judicial attitudes. Quoting a hockey saying, he implied that “you have to hit the puck in the direction it’s going,” indicating that judicial interpretation standards have shifted abruptly.

Despite this, he assessed that most of the 46 rules they have established have been passed and are already in effect. Notable reforms include shortening settlement cycles, reforming money market funds, and innovating the Treasury bond market. Substantive reforms such as recovering salaries due to false financial reports by company executives and notifying investors of data breaches have been implemented. However, he expressed a desire for more effective responses to future judicial challenges.

Cryptocurrency’s Impact on Election Results and Gensler’s Evaluation

Gensler was skeptical about claims that the cryptocurrency industry influenced the 2024 presidential election. He stated that voters base their decisions on broader issues like inflation and economic policy, and that the impact of cryptocurrencies on voter turnout is limited. He interpreted that policy positions in financial regulation were not decisive factors in the election outcome.

Nevertheless, he maintained the fundamental view that regulatory consistency is crucial for market trust. The core message was that basic trading rules in financial markets cannot be broken.

Gensler’s Position on Litigation-Dependent Regulation

In response to critics who argue that the SEC relies too heavily on lawsuits rather than legislation, Gensler countered that current laws are sufficient. The problem, he said, is not the law but compliance. A significant portion of the crypto industry is subject to securities law regulation but fails to comply.

He pointed out that the crypto industry tends to rely more on sentiment than fundamentals, unlike traditional finance. However, he emphasized that if basic principles are in place, proper disclosure under securities laws is essential. This has been Gensler’s consistent stance—that these are the fundamental trading rules.

Major Risks in the Current Market and Future Outlook

Gensler identified policy uncertainty as the biggest risk in the current market. He assessed that ambiguity in policy direction during the transition of the administration affects market sentiment. He also mentioned high leverage, low margins within the capital markets, and structural risks in the repo market.

While acknowledging that AI can positively impact productivity, he also cautioned about risks that are yet to be fully understood. Gensler expressed concerns about how the next administration will handle the reforms they have implemented but believed that the core principles of transparency and investor protection cannot be reversed.

His final message was that if he could do it over, he would accelerate the completion of reforms in the government bond and stock markets and handle judicial issues more smoothly. As he concludes his term as SEC Chair, the assessment of his policy legacy will largely depend on the regulatory stance of the next government.