• Gary Gensler’s recent speech at the Annual Institute on Securities Regulation event indicates that he may expect to be out of office soon.
• This follows a pattern of SEC Chairs resigning following a change in administration.

At the PLI’s 56^th Annual Institute on Securities Regulation program, held on Nov. 14, Gary Gensler’s speech hinted at his nearing the end of his term as the SEC Chairman. This comes as speculation points to incoming President Donald Trump removing him from office.

Under Gary Gensler’s leadership, the SEC has adopted a regulation-by-enforcement model, which includes hazy regulations around cryptocurrency followed by enforcement actions against exchanges and protocols that default.

During his speech, Gensler referred to his job in the past tense as one of Trump’s campaign promises to the crypto industry was to fire Gary Gensler “on day one” of his presidential term.

Gensler’s crypto enforcement record

Gensler’s SEC has some notable cases against various crypto firms, the top being Ripple, Coinbase, Uniswap, and ConsenSys.

The agency’s multi-year lawsuit against Ripple Labs ended in a partial loss as a US Judge ruled XRP is not a security. However, this ruling only applies to XRP’s public sales, not its institution ones for which the company was fined $125 million.

Despite the partial victory, the ruling was counted as more of a loss for the SEC as it set a precedence for other cryptocurrencies with similar public sales being non-securities, a development that would unwind the SEC’s regulation by enforcement.

On the other hand, Gensler’s SEC has scored some victories in its pursuit of defaulting crypto exchanges as the agency won a case against Bittrex in August 2023. The exchange was fined $24 million for violating US securities laws and has since ceased its operations within the US due to regulatory uncertainties.

Gensler also pursued cases against crypto industry giants like Coinbase, Binance, ConsenSys, and even decentralised platforms like Uniswap; some of which are still ongoing.

Regulatory obscurity under Gensler

Obscure crypto regulations have characterized Gensler’s term. The SEC’s regulation-by-enforcement regime, which was predominant in 2023 but spilt over into 2024, created an uncertain regulatory environment that left exchanges in the dark about the rules surrounding crypto listings.

Exchanges like Coinbase demanded regulatory clarity and firms like ConsenSys sued the SEC for clarification on Ethereum’s status as a security after the agency served the blockchain infrastructure provider a Wells Notice for violating securities laws through its MetaMask product.

In an interview with CNBC in 2022, Gensler revealed that he believed most cryptocurrencies are securities and should be regulated as such. However, his agency failed to provide clear regulations for crypto companies and exchanges to follow. Instead, Gensler insisted that there’d been clarity for years.

While Gensler affirmed Bitcoin is not a security, the verdict was out for several other major cryptos, Ethereum in particular being a point of contention.

Coinbase has an active lawsuit against the SEC and is pushing for a court ruling to obtain crucial crypto policy documents regarding the SEC’s crypto regulations and its findings from investigations into Ethereum as a security.

The SEC is delaying the document release citing a three-year review period.

Meanwhile, Gary Gensler faces lawsuits from a coalition of 18 US States citing gross government overreach in his regulation of digital assets.

Whether or not Gensler approaches the end of his role as the SEC Chairman, the consensus seems to be that his approach to crypto regulation leaves much to be desired. As the SEC Commissioner, Mark Uyeda, said on Fox Business Morning in October 2024, “I think our policies and our approach over the last several years have been just really a disaster for the whole industry.”