Did the SEC's Gary Gensler really get crypto regulation right? I am not so sure.
In my opinion, it's inaccurate to give Gary Gensler credit for chilling the crypto economy and way too soon for anyone to claim victory over fake money.
“When you can assume that your audience holds the same beliefs you do, you can relax and use more normal means of talking to it; when you have to assume that it does not, then you have to make your vision apparent by shock -- to the hard of hearing you shout, and for the almost-blind you draw large and startling figures.”
― Flannery O'Connor, Mystery and Manners: Occasional Prose
Securities and Exchange Commission Chair Gary Gensler prevented the crypto industry from causing a financial crisis and protected investors and the public from a more severe industry meltdown. The American Economic Liberties Project
That's a bold statement.
Is it accurate to give Gary Gensler all the credit and is it, perhaps, too soon for anyone to claim victory?
A campaign kicked off by Matt Stoller Nov 11, followed by The American Prospect's Dave Dayen Nov 23 and Bob Kuttner Nov 28, and then wrapped up in a bow by a Bloomberg columnist on Nov 30 — quoting Stoller and Dayen — positions U.S. Securities and Exchange Commission Chairman Gary Gensler as the one regulator reining in crypto.
Kuttner actually called Gensler the "one real hero of this whole mess".
Their intended last word on the subject is found in a whitepaper, "Gary Gensler Got It Right,” published December 13 by The American Economic Liberties Project and co-authored by Stoller, a Director of Research at AELP.
I mentioned Stoller's lead-off piece and Dayen's follow-up in The Dig on Nov. 27:
Few focused on those remarks until I pointed out on Twitter that Bloomberg's Max Chafkin had quoted Stoller and Dayen to make his point.
Chafkin claims FTX's Sam Bankman-Fried fooled a lot of people — but not Gary Gensler! Chafkin writes:
In fact, there’s perhaps only one person who looks good amid this fiasco: Gary Gensler, the top securities regulator in the US and arguably one of the only senior Biden administration officials who was trying to stop the excesses of the industry that Bankman-Fried and his enablers promoted.
A Twitter conversation between Matt Stoller and I ensued and he eventually asserted, more than once, that I “go after” Gensler because I "hate him".
My opinion of Gary Gensler, and why I hold that opinion, should be well known by now.
Matt and I agreed in the DMs to stop bickering in public and to come back to the subject when his “report comes out", as he put it. We know each other, I have enormous respect for him and Dave Dayen, and we have been on the same side for a long time in his long and now successful campaign to bring renewed enforcement of antitrust laws to the policy forefront.
We now have that "report".
It's a little short — well a lot short — on data and long on what I think is unsupported Gensler boosterism. Unfortunately, in my opinion, it does not make the case, primarily because it personalizes the argument to such an extent that it creates a straw man: If you do not agree with the praise of Gensler you must "hate" him.
I think we should be discussing whether the SEC, in general, has sufficiently stifled crypto fraud via vigorous enforcement and contained any contagion from the crypto meltdown, first under the leadership of Jay Clayton during the Trump era and, now, during the Biden administration under the leadership of Gary Gensler. Instead, the AELP report praises Gensler personally, for whatever has been done, and deflects attention and any blame for whatever has not. When I took exception to uncritical praise of Gensler as an individual, the response was to claim that since I did not join in praising Gensler, I must "hate" him and, therefore, seek to bury him.
The whitepaper from The American Economic Liberties Project makes the following points, in italics, and I follow each with my commentary.