In the US crypto sector, few figures are as hated as Gary Gensler has become in the past week. And the Chairman of the Securities and Exchange Commission (SEC) has quickly become crypto’s public enemy number one.
Not since Sam Bankman-Fried’s spectacular fall from grace has anyone elicited so much vitriol among the less censored corners of the crypto sphere. And even among crypto firms’ carefully worded statements, a deep resentment can be found just below the surface.
David Sacks Accuses Gensler of Exceeding His Authority
One of the high-profile voices criticizing Gensler this week has been David Sacks.
During an episode of the All-In Podcast on Saturday, the tech entrepreneur of Paypal Mafia fame had some strong words for the SEC Chairman.
Commenting on the SEC’s recent legal actions against Coinbase, Sacks argued that there are no consumer protection issues at stake as there may have been had the commission targeted FTX earlier.
Because “Coinbase has essentially done everything right,” he contends that “what Gensler and the SEC are saying is that it is not legal to operate a crypto exchange in the United States.”
He added that he thinks only Congress has the power to impose such sweeping restrictions. As such, Gary Gensler is “far exceeding his authority” in effectively curtailing the ability of U.S. citizens to trade cryptocurrencies. “It is not up to the chairman of the SEC to say that Americans should not be holding crypto,” Sacks emphasized.
Gensler-Warren “Alliance” Out to Destroy US Crypto Sector
Sacks’ opinion that the SEC’s recent actions risk seriously undermining U.S. citizens’ ability to purchase crypto broadly chimes with industry-wide criticisms. But his next statements take on a more conspiratorial undertone.
“The scuttlebutt is that [Gensler] has an alliance with Elizabeth Warren, and the rumor is that she will make him Treasury Secretary if he basically destroys crypto in the U.S.” he alleged.
To be clear, there is no evidence to suggest that Elizabeth Warren and Gary Gensler are in any sort of cahoots to bring down the U.S. crypto sector. Nor that there is a backroom deal between the two. Nevertheless, Sacks’ comments resonate with widespread suspicion of Senator Warren among crypto advocates.
The democratic politician has frequently positioned herself as a crypto hawk. And she has often called for greater oversight of exchanges and enhanced protections for retail investors.
She has previously pushed for regulation that would hand the SEC enhanced powers to oversee the crypto space. And in March, Warren introduced legislation that would ban crypto mixers and impose limits on the use of crypto ATMs.
SEC Crackdown Risks Sending Crypto Business Overseas
David Sacks’ choice of phrasing could be considered bombastic. But there is certainly evidence to suggest crypto firms are already turning their backs on the U.S. market.
In the space of a week, major exchanges like Robinhood have delisted the tokens classified as securities by the SEC. While the U.S. arm of Binance has been forced to suspend USD withdrawals and deposits entirely.
And to make matters worse, outside of the United States, politicians are moving to poach exiled crypto businesses.
For example, on Saturday, one Hong Kong lawmaker openly invited Coinbase to relocate to an Asian city. Alluding to Hong Kong’s recently launched licensing regime for crypto firms, Johnny Ng said:
“I hereby offer an invitation to welcome all global virtual asset trading operators including @coinbase to come to HK for application of official trading platforms and further development plans. Please feel free to approach me and I am happy to provide any assistance.”
Experienced traders will no doubt find a way to continue buying and selling crypto despite the latest difficulties. But if the SEC’s goal is to erect barriers to entry and make it harder for U.S. citizens to get their hands on cryptocurrencies, all signs so far suggest that it is working.
Brian Armstrong Optimistic About Future of US Crypto Sector
Coinbase is certainly an attractive target for Hong Kong’s crypto hub ambitions. But it seems likely that the American company will continue to fight on the home front.
In an interview with the Wall Street Journal, Coinbase CEO Brian Armstrong lamented the SEC’s “regulation-by-enforcement,” approach over the past year.
“I don’t feel like there’s a clear rule book. The only high-level statement they’ve made is that everything other than Bitcoin is a security,” he remarked. Echoing Sacks’ comments on Gary Gensler, he added that if all crypto assets bar bitcoin are deemed securities, it would mean the end of the cryptocurrency industry in the U.S.
Further criticizing the SEC’s stance, Armstrong went on to state that he believes the law is on the side of the crypto sector, and that legal judgment will be needed to settle the non-security status of cryptocurrencies.
However, far from giving up, Armstrong said that Coinbase will go to court to challenge the SEC’s position and that “we’re proud to do it for the industry and America.”
Toward the end of the interview, Armstrong embraced an optimistic tone. “The U.S. is going to get to the right outcome […] even if it takes a while,” he remarked.
He went on to stress that the company also has multinational ambitions. Although it intends to carry on as the leading crypto exchange in the US. He said that he wants Coinbase to be “an American company that has a global footprint.