SEC Chair Gary Gensler's Influence on Crypto in 2023

Sec chair. Gary Gensler is one of the change makers to make Coindesk most influential list. Joining us now to discuss the 2023 list with through the Gary Gensler lens is none other than Coindesk global policy and regulation. Managing editor Nick Day who is also the editor of coin desk. Absolutely positively must read state of crypto newsletter. Give it to your family for Christmas. It's the one gift that they want and it's free. So win, win as far as I'm concerned. Good morning, Nick. Happy Monday. Good morning. Ok. We all love Gary Gensler. He's the Taylor Swift of regulation. What are some of the noteworthy things he did this year aside from dating a football player, right? That was Taylor Swift. We do what we can. No, obviously, sec chair Gansler has had a, you know, pretty, um you know, very active here. I would say we've gotten a better sense of his approach to the SEC and how I was looking at crypto under his watch uh than we have in, you know, maybe last year, for example. So, you know, the biggest examples of, of course, uh are the enforcement actions against crypto exchanges like Coinbase financing cracking where the SEC has alleged that, you know, they're basically fulfilling all of these different uh operations that would normally be fulfilled by different companies or different entities uh while under the same umbrella. So, you know, crypto exchanges in the S ECs view are doing exchange, exchange functions, brokerage functions, clearing functions all at once, those should be separated out. So, you know, this is uh I don't want to say it's a sea change. I think we've been moving this direction for a while under, you know, not just Gary Guns, but uh you know, even to some extent under his predecessor, Jake Clayton, but we're starting to see what this looks like. We're getting closer to seeing, you know, what the courts think and how, you know, the ju uh judiciary might look at this. We're also seeing, you know, this year we saw the special purpose broker dealer proposal that was again first, you know, proposed under Jay Clayton, uh get adopted and used by a company called Promethium. Much to the industry. Uh let's say they weren't super excited about it. Um But that is, that's chagrin. Chagrin is when you use that term. That that's like boom. Thank you SAS. No, whatever you say, it's a good word. Yeah, it's a good word. It's exactly literally. They're all walking around with chagrins. Yeah. And uh we gotta see what that looks like as well. I, you know, into the, you know, coming year. That's another thing that people are watching for because if that turns out the SEC doesn't and, you know, better, what work does have a framework for. Ok. Yeah, here's how you can launch, uh, you know, services, uh, without running a F of sec rules, you know, that's, uh, gonna be something that's gonna definitely have a serious impact on the rest of the industry. Find out what Prometheus Capital was drinking and order a bottle of that too. Nick. We, we've heard a lot from Gary Gansler's critics. Um In our time on this show, talk to us about some of Gary Gansler's supporters who is, who has backed Gary Gensler through all this. You know, what was really interesting is, you know, I was talking to a number of individuals while working on the first, uh you know, the most influential piece and I kind of expected a lot more criticism than I got. But, you know, I spoke to people who are, you know, working at companies that engage with the SEC that are, you know, to some extent, even involved in litigation with the SEC. And I, there were still, you know, it was a pretty, I would say more or less evenhanded as, you know, kind of uh approach to what he's done. You know, a lot of the concern seems to be, yes, there may be, uh you know, the criticism I heard where there were too many unfortunate actions, there could be more, you know, kind of concrete guidance. But on the other hand, the SEC is, you know, still going under the band. It has and there just isn't a lot of law. So, you know, even the people, um, you know, who I spoke to who are, again, they deal with the SEC on a regular basis. They have business before this agency. But, you know, they spoke on condition of an to try and, you know, not upset their business relationship and they still, you know, we're pretty kind of almost, not exactly praising him but still saying that he is doing a tough job in a way that makes sense. It almost seems like heresy in the crypto world to say that. Gee Garret Gensler isn't doing so bad. Right. And yet, and again, you know, these are folks whose entire businesses could be ended by the SEC so they wouldn't speak on record. But even with that, you know, they weren't in a position where they were like, oh, well, you know, we're just gonna slam the sec chair for, you know, whatever. Um, the big thing seems to be that, you know, he's doing what he can or what he should be doing under his current mandate. And if anything as congressman needs to get involved to try and, uh, you know, maybe force the SEC into a slightly different positions, if that's what, you know, the industry is looking for on, on the topic of Congress, Nic Rep, Patrick mchenry is fighting to get an industry backed regulation bill tacked to the must pass defense funding legislation. I believe we learned about that last week. Tell us about the bill and when a decision needs to be made here, why is this bill so important? Yeah, so this is, uh there's actually two bills that I think we're watching for. One is the stable plan legislation that the House Financial Services Committee voted on a couple of months ago. The is a market structure bill. Um The financial and uh was it Financial Innovation Technology Act for 2023? So there are two different issues ST plan bill. Um you know, it was largely bipartisan by the time it, you got to the committee vote, it was slightly less. So you saw the, you know, uh ranking member of the House Financial Services Committee, Maxine Waters, the Democrat of California trying to come out against it almost. Uh or at least, you know, you saw a number of Democrats just say we need a bit more time to iron out the details, but that didn't happen. Bill was passed at the committee market structure bill is kind of the uh I would say more controversial one in that it creates a safe harbor function for, you know, certain crypto projects that could allow them to operate, you know, safe from sec important actions to some extent before they you know, regulators have to figure out, ok, how exactly does this fit into existing law? So both of those bills are reportedly, you know, something that Congressman mchenry, who is the chair of the, you know, hospital service committee is trying to get into the defense, the defense bill, which is a must pass legislation happens every year. And a lot of times we do see a number of bills get attached to the National Defense Authorization Act because it's the only way to get to become law. A lot of, you know, smaller laws, uh just don't get voted on on their own. So, for example, this year, we're already seeing bills like defend off Fens and the act, which is a bipartisan senate bill, uh, get attached or, you know, getting pushed to get attached to the defense bill to ensure its passage. Um Congressman Henry has reportedly, you know, to try and block that from the house side if he can't get the legislation into the NDA A. But, you know, from the people I've spoken to, um, last week, I was in DC, a number of individuals who are, uh, you know, active in the regulatory, you know, lobbying and politics side. Uh, no one's quite sure if that's actually going to work. It seems kind of a little doubtful that we will see those bills, uh, you know, attached to the NDA A, but of course, this is an ongoing process. Time is running out we're in, you know, it's December. So there's only a few weeks left before we might see, you know, concrete action on this.