Gary Gensler's Contentious Reign Over Crypto Approaches Its End

Gary Gensler, the chair of the U.S. Securities and Exchange Commission (SEC), is nearing the end of his time leading the agency, and his departure could mark a turning point for the cryptocurrency industry. Gensler's influence over U.S. crypto policies has been unmatched, often positioning himself as the crypto sector's chief antagonist. With Gensler's days atop the SEC coming to a close, questions remain about how the landscape of crypto regulation will shift.

A Contentious Tenure

Since taking over the SEC in 2021, Gensler has opted to regulate cryptocurrencies through enforcement rather than crafting new rules. While this stance has brought significant challenges to crypto firms, Gensler has defended his approach, citing the "time-tested" laws governing securities. The SEC's use of the Howey test—a standard dating back to the 1940s to determine whether an asset is a security—has been a focal point in the agency's legal battles with crypto companies.

Crypto leaders and congressional allies have frequently criticized Gensler for blocking innovation and leaving crypto businesses in regulatory uncertainty. Congress has even moved toward establishing a legal framework for digital assets that would limit the SEC’s reach, although this legislation is still pending approval in the Senate.

The Future of Crypto Regulation

As Gensler's tenure winds down, a new era for crypto regulation looms. Traditionally, SEC chairs step down after a new president takes office, but Gensler's term officially extends until January 2026. Should the next president—potentially Donald Trump—take office, the expectation is that Gensler would step aside, though he has the option to remain as a commissioner and maintain a Democratic majority at the SEC.

If Gensler does step down, the agency's approach to crypto could change significantly. Under a Trump administration, either of the two Republican commissioners, Hester Peirce or Mark Uyeda, could take over as acting chair. Peirce has been a consistent advocate for the crypto industry and has openly disagreed with Gensler's strategy of regulating by enforcement.

Gensler’s Legacy and What Lies Ahead

During his tenure, Gensler played a critical role in shaping the U.S. regulatory stance on crypto, often standing in opposition to the industry's goals. Critics argue that his enforcement-driven approach left the crypto sector uncertain about compliance requirements, while supporters see his actions as a necessary means of protecting investors.

Regardless of who takes over as SEC chair, the crypto industry will continue to navigate regulation. The next SEC leader will have to decide how to handle ongoing court cases, including foundational disputes involving Ripple and Coinbase that may eventually reach the Supreme Court.

Gensler’s decisions have been controversial, but some believe his influence has ultimately helped legitimize and mainstream cryptocurrency. As Dennis Kelleher, CEO of Better Markets, puts it, Gensler's legacy may be that of the one person in government who did the most to bring crypto into the regulatory spotlight—whether the industry likes it or not.