When President Biden appointed Gary Gensler to chair the U.S. Securities and Exchange Commission, many in the crypto community reacted positively.  They thought that his MIT background, among other things, might usher in days of lighter regulation.  But that has not been the case.

For example, as we reported in July, he talked about more regulation of stablecoins and DeFi.  And, the optimism that many had that the SEC would finally approve Bitcoin ETFs under Gensler has faded, with the Chairman hinting that approval would be more likely for an ETF based around futures rather than the cryptocurrency itself.

Most recently, he put cryptocurrency exchanges on notice in a September 1, 2021 interview with the Financial Times.  He repeated what he has often said about the public policy imperatives of investor protection, guarding against illicit activity and maintaining financial stability.  The article said:

Gensler expressed disappointment with the industry’s response to his suggestion that trading platforms register with the SEC on the grounds that a sufficient number of cryptocurrencies qualify as securities. “Talk to us, come in,” he said. “There are a lot of platforms that are in operation today that would do better engaging and instead there is a bit of . . . begging for forgiveness rather than asking for permission.”

The Chairman also explained that he was focusing on cryptocurrency trading platforms because 95 percent of the activity of what he characterized as a “highly speculative asset” take place on those platforms, where investor protections were, in his words, “really sparse.”

In the Chairman’s remarks before the European Parliament Committee on Economic and Monetary Affairs on September 1, 2021, he reiterated his concern about crypto trading and the platforms on which they are traded. “Unlike traditional exchanges . . . crypto platforms provide direct access to millions of investors. There’s no broker in between the public and the platform. Therefore, absent clear investor protection obligations on these platforms, the investing public is left vulnerable.”  He also reiterated his concern about stablecoins, saying:

The second area I’ll highlight is the centrality of stablecoins — crypto tokens pegged to the value of fiat currencies — to this market. You’ve heard about Facebook Diem, but we already have an existing stablecoin market worth $116 billion.  These tokens are embedded in crypto trading and lending platforms.

In July, nearly three-quarters of trading on all crypto trading platforms occurred between a stablecoin and some other token.  Thus, the use of stablecoins on these platforms may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money laundering, sanctions, and more.


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.