Countdown to Resignation! SEC Chairman Gary Gensler Responds to 11 Key Questions on Cryptocurrency and Capital Markets

Author: Weilin, PANews

There are only 6 days left until Donald Trump's inauguration as President of the United States. On January 14th, Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), gave interviews to CNBC and Yahoo Finance, and his leadership style and policy legacy became hot topics. Previously, Gensler announced that he would step down as Chairman of the SEC on January 20th.

Based on these two interviews, PANews has compiled 11 important questions about cryptocurrency and the capital market, as well as Gensler's responses.

On January 14, the U.S. Securities and Exchange Commission (SEC) took action against Robinhood and some private equity firms. With less than a week left in your term, can we expect more action from the SEC?

We are entrusted by the public to ensure that the capital market works for them, protect investors, and ensure that people comply with the law. We have a significant responsibility and will fulfill it, regardless of who the leadership is. There will be a different leadership transition this week and next week, but we will continue to ensure that the capital market serves investors and that market participants comply with the law.

This is our job. Essentially, how can trust in the capital market be established if facts and laws are not followed? In fact, honest actors in the market will benefit from it, as more investors are willing to enter and participate in the market.

2. What does the next government mean for the SEC? Are you worried that the things you have done during your term will be overturned by the next government?

The achievements we have made during this government term are very significant. I took office after the GameStop incident, which was at the peak of a bunch of Special Purpose Acquisition Companies (SPACs), and we implemented the most important reform in the stock market. I would say that we, along with other commissioners, completed this reform in a consistent and bipartisan manner. We also made significant reforms in the government bond market. I can't imagine anyone wanting to go back to longer settlement periods, as we have shortened the settlement period to one day.

I can't imagine anyone wanting to withdraw the first federal privacy notice to the public, which states that you will be notified if your information is disclosed by an investment adviser or broker. I dare say, I don't think anyone would want to roll back these measures. They wouldn't make it easier for insiders to trade on material nonpublic information. So, I'm very satisfied with the work we've done.

Of course, democracy has its consequences, and the next team may choose a different direction, but I think these are good policies that reduce costs and promote integrity in the capital market.

3. Some people believe that supporters of cryptocurrency helped Trump win the latest election. How do you respond to these views?

Building trust in the capital market is crucial, and people need to abide by the laws passed by Congress, which this great institution is enforcing. Think about this issue, we have rules on highways, traffic lights, and patrols. If you are driving a hybrid car on the highway, does it not have to follow traffic laws? Or does an electric car not have to follow regulations on the highway? We also enforce laws consistently in the financial market, and the cryptocurrency field is not compliant.

I also wanted to say that the voters are smart enough to know that their votes are based on other issues, such as inflation or other economic issues. I have not seen any signs that cryptocurrency is a major factor in voter turnout.

4. You have achieved many accomplishments during your term, such as shortening settlement cycles and reforming the currency market funds and national debt market. However, you lost 4 out of 5 challenges against your rules, which exceeds the total of the previous 3 chairs. Is there anything you hope to do differently?

For anyone in government work, this is an interesting time as the courts are undergoing significant changes. The great hockey player Wayne Gretsky once said something to the effect of you should hit the puck in the direction it's going, not where it's been. Here, the courts are like the puck, so where are they going? They're reinterpreting the law, whether it's environmental law, communications law, health law or securities law.

We have always acted in accordance with the law and carried out our work in accordance with the laws passed by Congress. We have formulated 46 rules that are very important to the capital market, most of which have not only been passed but also implemented. So people can now benefit from these rules, such as knowing whether corporate executives are compensated on the basis of inaccurate financial reports, and whether it is necessary to recover this information. As you said, we are reforming in the currency market field, but at the same time, the SEC can now obtain better information about private funds. So we have achieved a lot together.

5. You have repeatedly warned of the risks of cryptocurrencies. In the past year, to a certain extent, the court has forced you to approve spot Bitcoin and Ethereum ETFs, opening up cryptocurrency investments to the public. Do you hope for different results? Do investors face greater risks as a result?

Bitcoin itself is not a security, and neither I nor my predecessor said that Bitcoin is a security, nor did we say that Ethereum is a security. I believe that investors in Bitcoin and Ethereum, including the public you mentioned, had the opportunity to invest before the ETF products. During my tenure, I approved a Bitcoin ETF, which was a spot ETF that was later introduced. Investors have better protection, lower costs, stricter regulation, and market oversight in spot trading products, which are registered and compliant with SEC requirements. My predecessor had rejected these products, and we followed Jay Clayton's leadership thinking. Bitcoin and Ethereum occupy 70% to 80% of the cryptocurrency market. What I am really concerned about is the thousands of tokens that continue to exist, the conditions under which investors are essentially investing in or, shall we say, gambling on a project, and they need appropriate disclosure. The law requires that you should receive such disclosure, but currently these tokens are not compliant. I am not prejudging any project.

6. You seem to be intentionally separating Bitcoin from other parts of the industry. Have you started to develop new perspectives on Bitcoin? Do you believe that Bitcoin has intrinsic value and serves as a store of value? Or do you think that when we look back in 10, 15, or 20 years, it will be like the 18th-century tulip bubble? You have taught at MIT, so you should have some opinions. Have you read the book 'The Bitcoin Standard'?

It's hard to predict. I know your view on these other currencies, I know you have a negative view. But as for Bitcoin, the SEC has never said it's a security.

Yes, (I've read it), I think Bitcoin is a highly speculative and volatile asset. But with 7 billion people in the world, everyone wants to trade it. Just like we've had gold for 10,000 years, we now have Bitcoin, and there may be other similar things in the future. These thousands of other projects need to demonstrate their use cases and prove that they have practical fundamentals, otherwise they won't be sustainable.

7. Don't you like other cryptocurrencies?

I have never owned these currencies, and I have been in this field for 7 or 8 years.

8. How do you view the concept of prediction markets, especially the decision by Kalshi to hire Trump's son as an advisor?

I have no opinion on who others hire. But the capital market itself is vast, a $120 trillion capital market, whether it's stocks, bonds, or ultimately the prediction market, is about predicting future cash flows or predicting future opportunities for enterprises. Therefore, these markets are, in a sense, all about predicting the market, which is also why I am proud of some of the reforms we have made. We have implemented better information disclosure to ensure that only meaningful content is disclosed to investors so that they can make their own judgments about the future based on this information.

Critics argue that the SEC relies too heavily on litigation rather than legislation. What do you think?

We have laws. Congress has passed these laws, and of course they can change. But as part of the cryptocurrency space, the public is investing in these projects, many of which are regulated by securities laws. In this space, many companies do not comply with the regulations. The topics you discuss every day mostly revolve around stocks, bonds, or the fundamentals, valuation, and combination of fundamentals and emotions in the market. The cryptocurrency space seems to rely more on emotions and much less on fundamentals. But if there are fundamentals, and I'm saying if, then appropriate disclosures need to be made in accordance with securities laws. These are the basic trading rules.

10. What do you think is the biggest risk in the current market?

We are currently in a presidential transition period, and democracy has been demonstrated. Certain policies will become clear over time, but there is definitely uncertainty in policies. In the past four years, I have also mentioned that there are many leverages, loans, and low margin situations in the capital market. These issues typically occur in the so-called repurchase market where commercial banks provide leverage to macro hedge funds. Finally, I believe that artificial intelligence has transformed productivity and positively influenced various fields, but there are still risks in the future.

11. If you could start over, what different decision would you make?

I hope we can complete the reforms in the government bond market and stock market as soon as possible, and handle the issues related to the court more smoothly. It is worth noting that the attitude of the court is undergoing drastic changes. I really hope to be able to predict these changes better, so that we can do something that can better respond to the challenges posed by the court.

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Statement: The article represents only the author's personal opinions, not the perspective and position of the blockchain, all content and opinions are for reference only, and do not constitute investment advice. Investors should make their own decisions and transactions, and the author and the blockchain will not be responsible for any direct or indirect losses incurred by investors' transactions.

〈Countdown to Resignation! SEC Chairman Gary Gensler Responds to 11 Key Questions on Cryptocurrency and Capital Markets〉This article was first published on "Blocklike".