Gary Gensler, the head of the Securities and Exchange Commission (SEC), is something of a scarecrow in the crypto community. On a crusade against companies and entities in the sector in recent months, he has been heavily criticised. But a video recently shared on Twitter shows that Gary Gensler was not always so hostile to the sector…
A video that speaks volumes about Gary Gensler’s past positioning
Before becoming head of the SEC, Gary Gensler was a professor at the Massachusetts Institute of Technology (MIT). He taught courses on blockchain and cryptocurrencies. An extract from his lectures in 2018 has been posted on Twitter, showing an SEC boss who is much more open to cryptocurrencies than he is at present.
At the time, Gary Gensler felt that the sector was not really a regulatory issue. He said:
“Three quarters of the market is not securities, it’s just commodities, cash, crypto […]. [It’s not particularly an issue from a legal point of view”.
This statement comes as a surprise, given that Gary Gensler has recently made this very notion his hobbyhorse. He has said that the majority of cryptocurrencies are “securities”, including Ether (ETH), which is based on staking mechanisms.
Crypto community reacts to video
The video has, of course, caused a reaction from a crypto community particularly scalded when it comes to the SEC. As a professor at MIT, Gary Gensler apparently had a much more measured stance on the subject of cryptocurrencies. Coinbase CEO Brian Armstrong, who is currently in battle with the SEC, confined himself to a brief reaction to the video:
– Brian Armstrong ️ (@brian_armstrong) April 26, 2023
Some commentators have pointed out, however, that the crypto market has changed a great deal since 2018, and that the explosion in prices, and in certain sectors such as decentralised finance (DeFi), must have played a part in changing the SEC director’s opinion. But is this legitimate? After all, assessing the status of an asset as a security is based on a test, the Howey test. And this test does not change, whatever the amounts involved.
In 2018, Gary Gensler stated that “in the three jurisdictions [including the US] that follow the Howey test, […] three-quarters of the markets are not securities”. The nature of these assets has not changed, only their size… And the position held by Gary Gensler, now head of the SEC. One might therefore wonder why he has made such a sharp turn towards strong regulation of the sector.
