This is a great relief for the crypto industry as SEC was a bit stringent on the crypto ecosystem. Gensler is a more open-minded and pro-digital asset industry. He has a deeper understanding of the market structure, the future of crypto innovation, and how regulators can hinder or promote innovation. Why? Let’s take a closer look at what the new SEC Chairman has to offer to the industry.
More in-depth knowledge of the industry
Gensler was a blockchain teacher at MIT Sloan School of Management. He has hands-on experience on digital currencies policies and regulation even before congress. He has actively participated in different discussions globally that have given him new insights on everything.
That means that he is stepping into a job that he has experience and insights into, meaning the future is bright.
The right background
Gensler has a background in policies, markets, and financial technology. That means there are high chances that he will prioritize market structure.
In 2009, he got into CFTC in the middle of a crisis. But he managed to lead the over-the-counter derivatives market’s reform under the 2009 G20 Pittsburgh accord. He also helped reorganize the financial system by drafting the Dodd-Frank Wall Street Reform and Consumer Protection Act. Through the Dodd-Frank mandate, CFTC was able to pass over 65 rules.
Despite the moves, he still faced opposition. There were numerous complaints on the CTFC’s reform impact in harming the market.
His strategy still stood the test of time as the US swaps market has high performance, efficiency and resilience even at the height of the COVID-19 pandemic. This shows the importance of well-regulated markets to investors and stakeholders.
Gensler acknowledges the importance of a robust regulatory framework, which made the swaps market incumbents enjoy.
From his moves on regulatory frameworks, it shows how focused he is on investor protection. When investors are protected, they will focus more on creating capital using crypto-assets, ensuring that crypto is not used for the wrong purposes.
He expects to clarify everything when it comes to the crypto asset market structure and infrastructure. This will foster adoption and investor confidence, which is what the industry needs.
Previously, the SEC has been very hard on ETFs. There is hope that the trend will soon change. There will be more transparency on price discovery and formation using data to analyze the marketplace’s underlying liquidity and integrity.
The spot market will come to a green-light and have a role for the SEC. The Strategic Hub for Innovation and Financial Technology (FinHub) role will be enhanced to develop policies better.
Initially, international cooperation was strained due to the heavy requirements by the SEC. This will soon change. International regulators will be able to bounce back on board with collaborations. There is less international conflict expected. Biden’s administration is expected to have multilateralism, which will spread over to the SEC as well.
From the term at CFTC, we can judge that international frictions will decline. So far, the CFTC rulemakings on cross-border issues have impacted a lot of reforms. Even though there is no one-size-fits-all approach, there are still many jurisdictions that have been affected.
Although some gaps may be inevitable, a regulatory vacuum is not expected. The SEC is less likely to be stringent on the international regulatory framework.
Even though there is a generally positive outlook that is expected, the issue of spot markets remains a paradox. Digital assets such as BTC (Bitcoin) are still not considered to be securities by the SEC. Everyone in the ecosystem is curious to know the next steps with that.