Is Gensler Losing the Narrative?
The SEC Chair calls for coordination as the strength of the agency's claim to regulate crypto wanes
Gary Gensler may be losing control of the narrative around SEC-led regulation of the crypto industry.
Various government agencies have been jockeying for regulatory control as the crypto industry gains traction. The two emerging regulatory leaders are the Commodity Trading Futures Commission (CFTC) and the Securities and Exchange Commission (SEC). The SEC Chair, Gary Gensler, a former Goldman Sachs banker, has made his position clear that the SEC should become the leading regulatory body for the crypto industry.
“Gensler has asked SEC staff to collaborate with the Commodity Futures Trading Commission to develop a new plan to oversee platforms trading tokens that are a mix of securities and commodities, according to remarks at an event hosted by the University of Pennsylvania Carey Law School. More rules are needed for exchanges because retail investors are currently vulnerable to scams and market manipulation, he said.
“I’ve asked staff to consider how best to register and regulate platforms where the trading of securities and non-securities is intertwined,” Gensler said on Monday.” [Bloomberg]
So what does all this mean? It means that Gensler may be losing the narrative he’s been pushing all this time that the SEC is the best suited to regulate crypto.
Note the public call for collaboration with the CFTC. If there was any traction to that arrangement, it would have been a joint announcement once there was something real to announce. Instead, the SEC is floating a request, hoping the public will give it some weight in transit.
It has also become clear that the SEC is dragging its feet on a long-awaited spot Bitcoin ETF. Grayscale, a crypto asset management firm, is campaigning publicly to support its spot Bitcoin ETF application during the SEC’s mandated 240-day review period. During this time, the SEC will conduct due diligence and seek comments from the investment community.
The SEC has already approved Bitcoin Futures ETF products from multiple firms. Grayscale believes a spot Bitcoin ETF will give investors more choice in their desired exposure to BTC using spot markets instead of derivative products.
What should we watch for going forward? We will have to see how the SEC maneuvers as the CFTC gains a lead in the race to regulate crypto. Beyond that, the remaining financial regulatory agencies will also have to find their place.
Thanks for reading Vault! If you were forwarded this email, subscribe for free to receive everything Vault publishes.