Car Keys, Soccer Balls: Gary Gensler's Approach to Regulation
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Car Keys, Soccer Balls: Gary Gensler's Approach to Regulation
What was Gary Gensler's view on the cryptocurrency industry at this final moment, before the Trump administration took office, as he gave his personal account of SEC regulation and discussed the crypto sector?
Navigating Web3 tides with focused insightsAuthor: Gary Gensler
Translation: Nicky, Foresight News
Two years ago, when I spoke with you all here, I quoted President Franklin D. Roosevelt’s words upon signing the first foundational securities law in 1933: “This law and its effective enforcement are steps in a plan to restore some of the old standards of business honesty.”
This year, I want to talk about that effective enforcement. As usual, I must emphasize that the views expressed here are solely my own as Chair of the Securities and Exchange Commission, and do not necessarily reflect the opinions of other commissioners or staff.
I believe that over the past 90 years, our securities laws have made significant contributions to our nation’s remarkable economic success. These laws have benefited both investors and issuers, while helping build trust in our capital markets. They have also helped reduce costs and lower risks.
The results are evident in the size, breadth, and depth of our capital markets. Today, our capital markets exceed $120 trillion in value—a key part of our national comparative advantage, supporting the dominance of the U.S. dollar and our global role. We are the world’s preferred capital market for issuers and investors alike, accounting for over 40% of global capital markets despite representing only 24% of global GDP—achieving outsized influence from a relatively smaller base.
This is no accident.
President Roosevelt and Congress understood in the 1930s that well-regulated markets foster trust and create the conditions for economic success.
Later, Presidents Richard Nixon, Gerald Ford, Ronald Reagan, Bill Clinton, George W. Bush, and Barack Obama—as well as Congress—repeatedly recognized this truth when updating securities laws to best promote our capital markets and economic prosperity.
One way I think about this is by comparing it to common-sense rules in driving or football.
Over the years, whenever one of my three daughters borrowed the car keys, I could sleep soundly knowing that commonsense traffic rules were protecting them—stop signs, traffic lights, speed limits, and laws against drunk driving. Police officers patrolling the streets ensure these rules are enforced, allowing my daughters to drive safely and giving me peace of mind.
These traffic rules not only help reduce the risks of driving but also support broader economic growth. Imagine if, a century ago, there had been no traffic lights or speed limits—American automakers might never have achieved their historic success, because American consumers wouldn’t have trusted this new technology.
Likewise, as we enjoy football games this fall, imagine what it would be like if the National Football League (NFL) had no rules at all. Without referees enforcing order on the field, chaos would reign and players would get injured.
The commonsense rules of football not only protect players but also build fan confidence in the fairness of the game. It is precisely the existence of rules and referees that enables the sport to grow and thrive.
Finance is no different—commonsense rules reduce risk and build trust among market participants.
When President Roosevelt and Congress crafted securities laws in the 1930s, they did so after witnessing how fraudsters, swindlers, con artists, and Ponzi schemers exploited investors during the 1920s. They learned the lesson of unregulated markets left to run wild. In the decades since, as technology and business models evolved, successive administrations have repeatedly seen similar benefits from strengthened market oversight.
They also understood that “traffic rules” should extend beyond preventing fraud. Congress recognized the public importance of securities information and therefore established key provisions on disclosure. They also enacted important corporate governance requirements to ensure companies operate properly. For intermediaries, Congress placed significant emphasis, creating critical rules on conflict-of-interest management, transparency of disclosures, and standards of business conduct—all designed to protect investors and maintain fairness and integrity in the markets. Special attention was paid to gatekeepers such as investment banks and auditors, who were given specific responsibilities to ensure they play constructive roles in maintaining market stability and safety.
Crypto Markets
When I joined the SEC in 2021, Chairman Jay Clayton had already initiated around 80 enforcement actions against participants in the crypto market who failed to follow basic rules—one of which was the Ripple case.
Chairman Clayton and his commission frequently discussed these emerging markets; just three months into his tenure, the Commission issued the DAO Report. The SEC has remained vigilant, ensuring entities issuing or selling securities comply with our time-tested securities laws. Since 2018, such enforcement activities have typically accounted for 5% to 7% of our overall workload.
Multiple courts have upheld our efforts to protect investors, rejecting all arguments claiming the SEC lacks authority to enforce securities laws over different forms of securities offerings.
Notably, not all assets are considered securities. Both former Chairman Clayton and I have clearly stated that Bitcoin does not fall within the definition of a security, and the Commission has never treated it as such. Our focus has always been on a subset of the approximately 10,000 other digital assets—many of which courts have determined are securities. With that in mind, excluding Bitcoin, Ethereum, and stablecoins, the remainder of the crypto market is worth about $600 billion—less than 20% of the total crypto market and only around 0.25% of global capital markets.
I’d like to highlight two key points:
First, those offering or selling securities to the public must register and provide full and fair disclosure to investors. Second, intermediaries—including broker-dealers, exchanges, and clearing agencies—must register and be subject to appropriate regulation regarding conflicts of interest, disclosure transparency, and standards of business conduct.
Prior to my joining the Commission, at the request of SEC staff, many applications for Bitcoin exchange-traded funds (ETFs) and exchange-traded products (ETPs) had been denied or withdrawn. However, shortly after I joined in 2021, the first Bitcoin futures ETF became effective following consultation with Commission staff. While we initially followed the prior administration’s approach regarding ETPs holding physical Bitcoin, earlier this year the Commission approved spot Bitcoin and Ethereum ETPs. Compared to non-compliant corners of the crypto market, investors in these products benefit from greater transparency, stronger regulatory oversight, lower fees, and more competitive markets.
For years, this sector has caused serious harm to investors. Beyond speculative investments and potential links to illegal activity, the vast majority of crypto assets have yet to demonstrate sustainable utility.
Everything we do is aimed at ensuring compliance with the law. Since the 1930s, we have consistently emphasized the importance of compliance. It protects investors, builds trust in our capital markets, and helps issuers access capital efficiently. Ninety years of history show that strong securities regulation both fosters market trust and enables innovation.
Reflections
My parents, Sam and Jane Gensler, never worked in finance and didn’t even finish college. Yet when they invested their hard-earned savings in the securities markets, our entire family benefited from those commonsense market rules.
The U.S. Securities and Exchange Commission promotes trust by effectively overseeing well-regulated securities markets. This is why investors and issuers come to the market with enthusiasm—like fans watching a football game. It is the foundation upon which the world’s largest capital markets have grown steadily. And it is precisely why our nation has achieved extraordinary economic success over the past 90 years.
I am incredibly proud to work alongside my colleagues at the SEC—men and women who day in and day out stand guard on the financial highways, protecting the life savings of every American household.
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