New SEC Chairman Gary Gensler Keeps Bitcoin at the Forefront

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Apr. 14 2021, Updated 12:28 p.m. ET

The SEC is prepared to confirm Gary Gensler's seat as chairman on April 14 at 11:45 a.m ET. Gensler has made it known that one of his key concerns involves Bitcoin.

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Gensler has been in public service, ranging from the Treasury Department to the Maryland Financial Consumer Protection Commission, for more than two decades. His new role will have a lot more sway for securities in the blockchain sector. 

Gary Gensler's SEC confirmation could lead to cryptocurrency reform.

Currently, there are only a few instances in which cryptocurrency is regulated by the U.S. government. If the sale of crypto relates to an asset that falls under state or federal law, is considered a money transmission, or props up a money services business, then it's regulated. Also, crypto derivative trading (like futures and options) is regulated by the CFTC (Commodity Futures Trading Commission).

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That could change under Gensler's leadership, who will undoubtedly face pressure from SEC commissioners on Bitcoin. Bitcoin ETFs are of particular concern since funds like these are regulated by the SEC rather than the CFTC. The Grayscale Bitcoin Trust (OTC:GBTC), the Bitcoin Fund (TSE:QBTC.U), and Riot Blockchain (NASDAQ:RIOT) are a few examples of existing cryptocurrency funds.  

Gary Gensler's crypto stance suggests he's a proponent of Bitcoin.

If it weren't for pressure from colleagues, Gensler might not even prioritize regulation reform for bitcoin securities. While serving as a professor at MIT, Gensler actually taught classes on blockchain and digital currencies. He clearly has a thorough understanding of the matter (enough to teach it). However, the crypto's reach has expanded dramatically in recent years, which could change his stance.

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Gary Gensler's Bitcoin comments give insight into the matter.

In March as Bitcoin values fell, Gensler commented that it would be a challenge to keep fraud and manipulation out of cryptocurrency markets. It seems that he will spearhead efforts to increase government oversight of cryptocurrency as a whole, not just bitcoin (although there isn't any denying that this key crypto will be at the forefront of the matter).

For Gensler, innovation is important in the crypto space. However, he said that "we want to ensure that there’s appropriate investor protection."

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As for the SEC side of things, Gensler has said in the past that if a company has a token that represents an ownership stake in the currency, it should be regulated because investors are seeking appreciation of their cost basis. He said, "When you quack like the duck, when you swim like the duck, when you walk like the duck…I think the bird’s a duck."

Of course, Gensler recognizes that Bitcoin is different from other cryptos in that it came into existence with no initial token offering and no common enterprise, according to Quartz.

All things considered, Gensler will have his hands full as he figures out how to regulate Bitcoin as a security, as well as other cryptocurrencies now and yet to come. 

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