Not About Gary Gensler vs US Congress
Latest story in the crypto news has been SEC Chair Gary Gensler's appearance before US Congress. SEC under Gensler's leadership has become the main villain against crypto due to its hostile actions against cryptos, exchanges, and crypto based businesses. The core issue among government regulatory agencies and crypto world hasn't really been hostile behavior of these agencies against technological innovation, but rather the inability to provide legal clarity. Gensler's appearance in a public hearing attracted a lot of attention, as many were interested to get insights into his thoughts about crypto and perhaps even gain more clarity of SEC's mission on crypto.
The hearing ended up being a disappointment. Gensler was either unable or unwilling to provide his thoughts on crypto, nor did he present a clarity regarding SEC's methods or positions on crypto regulations. It doesn't seem like we will see any clarity in this matter any time soon. This has already been recognized by some exchanges who one by one deciding to stop their operations in the US and instead shifting their focus to more global markets.
I am often made fun of for speaking highly about Gensler in the past. Those had to do with the lectures Gensler had on blockchain and bitcoin when he was a professor at MIT. Otherwise I had no thoughts about him as a person. I only thought he was among the people who had an understanding of blockchain technologies and bitcoin in particular. From his lectures it is clear he does have a good understanding of this innovation. Perhaps that is the reason why he was able to declare bitcoin as not a security and rather a commodity. Such position was a welcome news for bitcoin and crypto world. While it was one of the good things Gensler has done and deserves credit for, he was unable or unwilling to clearly state his position regarding any other individual crypto assets or networks.
This has become even more evident during the Congressional hearing. Gensler was asked multiple times a "yes or no" question, regarding his position about Ethereum. He didn't yes, nor did he say yes. Instead he kept repeating the script he has memorized as a generic response. This and other actions of SEC demonstrate how the agency is unwilling to provide any kind of clarity. That goes against what they claim to be doing - protecting consumers and investors. Investors are the among the group that need the clarity most. Not being able to give clear answer for such a simple question creates more confusion instead. If the number two crypto asset by market cap can have a clear classification by the securities regulating agency, others don't have any chance.
I don't know if SEC actually has a good plan they have intention to implement, or bigger vision for regulation. One would hope so. Or maybe they are not ready or competent to handle this task with good faith. It probably would be much better if they just stayed aside and dedicated their energy into traditional finance, stock markets, and banks. In other words, if there is no value that can be added by the actions of the agency, inaction maybe preferable in order not to do more harm. What if the goal of such tactics is to do harm to crypto. We can only guess. If only they could be more transparent and move towards more clarity.
Gensler may seem to be the bad guy, and congress people may have shown some level understanding in crypto and let their concerns be heard publicly. However, when it comes to lack of clarity, Congress itself is more responsible than any government agency. It is within the power of Congress to introduce laws that create a regulatory frameworks and remove confusion from the equation. Over the years, Congress has demonstrated that they are incompetent in true problem solving skills. The purpose of public hearings like this usually to hold government agencies accountable, but also gain more knowledge regarding certain issues, so that Congress can come up with proper plans to find solutions in an educated manner.
I would think tackling the crypto issue would be the easiest for Congress. We all know Congress is unable to act fast and unwilling to reach compromises with opposing party's elected officials. But this normally applies to issues that parties have completely opposite views on. I don't believe crypto is among the issue that both parties have opposing views. Representatives and senators from both parties are all over the place regarding crypto. Some are very hostile, some are friendly, other have no clue. But none do so due to their loyalties to one party or the other. Ultimately, it is legislative branch that is responsible to make laws that are beneficial and provide solutions to new potential problems. It is a big problem that there is no legal clarity about bitcoin and crypto. This allows fraud to spread, and government agencies overstep their boundaries.
In fact, crypto is not a problem. SEC is, Congress is. Crypto would do just fine on its own. It doesn't need Congress or regulators to intervene or take actions just for the sake of appearing to be doing something. It has become very clear that their research and investigations have no results when it comes to actually protecting the investors. They failed to see the collapse of TerraLuna, they failed to see massive fraud in FTX, they had no clue about Silicon Valley Bank, etc. That is not to say they should have been on top of their game and prevented these events from happening. Better option is always to just stay away. Decentralized solutions do not need centralized regulations.
Crypto has been politicized. It is understandable it would be, because decentralized solutions like bitcoin pose a threat to status quo of financial systems and USD itself. Loss of trust in the fiat and banking system will drive masses to bitcoin and crypto by design. I am not in favor of USD losing its value or status. I believe both USD and crypto can coexist. However, when politicians think crypto poses threat to USD, they tend to create more confusion and come up with weird ways of attacking crypto. There are so many problems that need attention and solving. Crypto should be least of their concerns. They can't do anything about it anyway. We haven't seen anything good so far.
Politicians focusing their attention to crypto in a way how to figure out ways to control and regulate the space is not unique to the US, it is a global phenomenon. Very strange one too. Recently, it was reported that G20 was planning to address the issue of crypto and come up with a global plan for countries to follow. Why are they so concerned about crypto in G20 or international levels, makes zero sense. Why can't they understand that they don't add any value to bitcoin or crypto. By such statements and agendas these politicians once again demonstrate that they are not interested in solving real problems.
The good news of decentralized systems is, not only centralized governments are capable of shutting them down, they simply don't understand what they are dealing with. Some of them may take these decentralized systems like bitcoin monetary network as the enemies and something bad. When in reality bitcoin network doesn't have any political position, doesn't care about old or new systems. It has one function, and does it well.
There are also countries who slowly are realizing the benefits of being involved in bitcoin and crypto in one way or the other. El Salvador is a pioneer and will be remembered as the first countries who took the brave step of normalizing bitcoin in country level. There are other countries, while don't speak loudly about bitcoin and crypto, do see benefits as well and secretly participate in the decentralized networks by accumulating bitcoins and crypto. You may have read in the news that Bhutan has been investing in bitcoin without making any announcements.
Based on court records, Bhutan’s $2.9 billion national investment arm, Druk Holding & Investments, was a client of insolvent crypto lenders BlockFi and Celsius, according to documents revealed in a Forbes report on April 15.
source
It makes perfect sense for any country to accumulate some bitcoin at least as a hedge. There are many other ways countries can invest and participate in bitcoin and crypto that is beneficial to the country and its citizens. Anybody is welcome in open decentralized networks.
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Gary Gensler is no fool and understands the crypto industry better than we do - I think they all have some kind of plan, but they are not ready to voice it now - and therefore put on this show for all of us. Gary Gensler deliberately gave evasive answers and deliberately looked stupid! I suggest you think...
That's even scarier than having people who are uninterested and uninformed in power...
Their intention is not regulation or protection of investors, but controlling flow of cash.
And the protection of their old fiat system that gives them so much money and power...
Well, I'm not sure but I believe that there is something Gary Gensler is hiding.
Let's say he knows what he is doing.
I like to think Gensler is just acting the script and playing to the gallery. The SEC doesn't really know what to do and they're using this indecision ad a weapon. Inaction is an action. itself. I don't think there's going to be a grand scheme with the regulations. I just think the SEC doesn't really know the right thing to do. They know Crypto is not the problem.
The man wore a mask that couldn't be deciphered. He could have given the answers according to his understanding but decided to be vague and never said anything concrete. Perhaps, crypto should be left as it is and not make sense of from a political standpoint.
I hate all the vagueness about regulations because it keeps everyone on their toes. Nobody knows if they are breaking any rules and people just kind of know that they are fine because nobody is hitting them. Recently, the SEC has been attacking crypto companies and those centralized ones have been hit quite hard. I hate their ability to bring up charges whenever they feel like and that the vagueness on regulations/laws are the reason why they bring up the charges either.
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It is very strange how SEC is trying to establish some kind of order in crypto, but fails to demonstrate the criteria for such order. This makes me think they are dishonest about their intentions.
They are definitely dishonest. In my view, they are leaving it vague so they can hit someone when they want. It doesn't make sense at all unless it's for power.
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The good side is that people ARE REPLACEABLE, and this clown (or better-said, puppet) will be replaced probably very soon... The thing is that it can be late for the US as many companies will leave the country and find a more friendly country to do their business... The US is hit from all sides at the moment and these "internal" mistakes could cost the country a lot more than "attacks from the outside"...
I have zero doubts about crypto "survival"... Those who position themselves as friendly toward crypto and embrace it will be the winners...
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Even if Gensler is replaced, I doubt SEC will change it attitude towards crypto. At least not anytime soon.
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The only reason why they don't provide a good clarity framework for businesses to operate is the fact they want to keep the actual system alive. They don't like competition over money, especially China and the US as superpowers.
The regulators' scorecard is indeed impressive as demonstrated in Terraluna, FTX, and SVB. Such a high score keeps them confident to keep their duty to protect consumers and investors. The high value of their public service is the reason why they can't stay on the sideline. What a twisted mind!
Witnessing hostility is tolerable. What I find disgusting is to use public funds to pay these clueless regulators who think that decentralization in finance is the problem and that a centralized solution will finally succeed.
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There doesn't seem to be a clear picture of how cryptocurrencies are regulated and what government agencies like the SEC are doing. Even though it is important for regulatory agencies to protect consumers and investors, I agree that the lack of clarity and the unwillingness to give clear answers are doing more harm than good. I think Congress needs to step up as well, since they have the power to pass laws that can provide a regulatory framework and get rid of confusion.
Step 1. Encourage and fund small-block faction along with toxic maximalism in order to make Bitcoin difficult to use, unscalable and unattractive to people at large.
Step 2. Cozy up to scams like FTX to increase the perception that crypto is only scams.
Step 3. Declare every other crypto to be a security.
=> Crypto expends its energy inefficiently on an unimprovable and unadoptable product, while the rest of the space is too fractured to resist the SEC.
=> Protect the existing financial system from the emergence of viable crypto alternatives for as long as possible
Just a conspiracy theory to munch on.
Unfortunately, that seems to be the reality.
Extremely difficult, unless they change the definition of a security?
You don't need to change any definitions just to make the declaration, which he has already done and to set SEC policy by it. The Howey Test and the definition of a security broadly would only become important if it comes to court. In practice almost all crypto institutions are either just settling with the SEC or leaving US market as much as possible.
What a mess :( ...
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lol
With The EU green lighting regulation today Gensler and co will have to be removed or the threat of being left behind is real. Lets hope Gensler is going to be past tense very soon as this EU announcement changes things giving the time line to act now. I think it is good news that the US is not leading on Crypto regulation anymore as too many games are being played.
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They do like to play games.
The lack of clarity is the 'widening of the net" that basically enables the SEC to label everything and everybody as criminal. It's a strategic move... but is now starting to come under pressure, as it is becoming more and more blatant as time passes. He is likely to get axed soon...
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Maybe because he hasn't learned enough about crypto to have formed an opinion? If only we could get the right people in the right positions...
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