When Gary Gensler first came on the scene as the likely appointee for the next chairman of the Security Exchange Commission (SEC), many thought here was a fellow who was going to provide the needed guidance for crypto and how it was going to be integrated into everyday life. The last thing most expected out of Gensler was that he would turn into the Sheriff of Nottingham, stringing everyone up remotely related to crypto and on an Inquisitor crusade to wipe digital currencies out from American life. So what the hell went wrong?
Technically, nothing. People just didn't pay attention to who Gensler actually was.
Gary Gensler established himself as an authority on market oversight and investor protection based on a a background spanning academia, government service, and industry experience. In that mix, he was reputed to bring to the table expertise and pragmatism to his role as a key regulator. However, what is becoming apparent is that Gensler is clearly in the fiat camp, sees crypto as a threat to the American economy, and that it is his job to stamp it out to "save" the consumer.
Academic and Early Career
Gensler's start followed a classic Wall Street ivory tower path. He earned a bachelor's degree in economics from the Wharton School at the University of Pennsylvania. Then, Gary Gensler completed an M.B.A. from Wharton School. He also earned a second Master of Public Administration, from Harvard University's John F. Kennedy School of Government. In short, the man hit the career world with a very fancy pedigree and name-dropping educational background. However, that doesn't complete the picture. So, Gensler then held various positions at esteemed financial institutions such as Goldman Sachs and the investment bank, Rothschild, earning his executive stripes on Wall Street. That period spanned a good two decades, well long enough to network extensively among the big fiat banks and institutions.
Government Service
After his time in the private markets, Gensler jumped over to public service in 1997, being appointed by President Bill Clinton as Assistant Secretary of the Treasury for Financial Markets. In this role, Gensler played a part in shaping policies related to derivatives and oversaw the implementation of the Commodity Futures Modernization Act of 2000. This was his first big stamp in the financial regulatory field. Following his stint in the Treasury Department, Gensler then went on to serve as chairman of the U.S. Commodity Futures Trading Commission (CFTC) from 2009 to 2014, appointed by President Barack Obama. Here he was entrenched and made a name for himself as a cleaner, fixing the mess of the real estate Recession. The CFTC implemented multiple regulatory changes, including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, another big impact on oversight of the derivatives market. 2014, after the CFTC, was also the pivotal shift point when Gary Gensler moved into studying crypto.
Academic Contributions
By the later teen 2000s, Gensler was well onto a path of providing himself a comfortable third career in academia. With both his contacts from Wall Street and the federal agencies, he brokered involved into major academia projects in finance. That translated into a faculty position in 2018. He joined the faculty of the MIT Sloan School of Management, where Gensler taught courses on blockchain technology, digital currencies, and financial technology. It was this stint that gave everyone the impression, especially based on media quotes, that Gensler would know what he was doing with crypto and be a light in the darkness, providing a market-friendly plan how to evolve crypto in the U.S. once he was leading the SEC. Gensler's academic work had been highly regarded, and he was recognized for his ability to bridge the gap between theoretical concepts and their practical applications. So, it only made sense at the time that he would be the next positive step for the digital DeFi and coin world. However, that perspective completely ignored his earlier fiat market background.
The Timing of Crypto's Balloon Pop
It was while Gensler was at MIT that crypto went bonkers in speculation, and two years later, Bitcoin reached over $60,000 a coin. At that peak, well over $3 trillion had been pumped into the crypto market, a figure that fundamentally scared fiat banks and traditional investor sages. Both Warren Buffet and Charlie Munger were repeatedly bashing crypto as "fool's gold." Gary Gensler, however, was very quiet, establishing his new seat on the SEC in April 2021. Bitcoin was reaching above $57,500 at the time.
By August 2021, Gensler first made it known he wanted more controls on crypto, describing it as a threat to the consumer. Bitcoin was down to $47,300 by the end of the same month, losing more than $10,000 per coin. By November 2021, the SEC launched it's lawsuit on
It was only when the crypto market was thrashing in pain and collapse that Gensler's presence became stronger and stronger, kicking a wounded opponent repeatedly while it was on the ground. The timing of these repeatedly stronger attacks are not coincidence; a struggling business entity in any form can't fight two battles at once. Being attacked by a regulator is a "death-causing" event for many corporations if not god-awful expensive to fend off. When the market is down and the business is struggling, fending off such an attack then becomes almost impossible, and Gensler knows this from his own private market experience and the 2009 Recession fallout as a regulator.
The "sudden" animosity of Gensler towards crypto should not be a surprise to anyone who actually paid attention to his career span and history. However, the SEC's chair successfully duped everyone with a cover of being the crypto professor everyone loved. Now, not surprisingly, he will likely argue to the same students his hands are tied by the laws he must enforce. The question is whether his duplicity will remain covered in court.
