SEC Chair Gary Gensler has warned of widespread crypto failures, labeling the industry as speculative, sentiment-driven, and lacking the fundamental stability needed to survive.
Gary Gensler’s Chilling Crypto Forecast: A Ticking Time Bomb of Failures
Gary Gensler, the departing chair of the U.S. Securities and Exchange Commission (SEC), has expressed sharp criticism of the cryptocurrency industry, describing its speculative nature as a significant risk. He cautioned that many projects lack a solid foundation and are likely to fail over time.
“I’ve been around finance for over four decades. And everything in the markets trades on a mixture of fundamentals and sentiment at any given time,” Gensler remarked during an interview on Bloomberg Television last week. The outgoing SEC Chair added:
I’ve never seen a field that’s so much wrapped up in sentiment and not so much about fundamentals.
“And these 10,000 to 15,000 projects— many of them will not survive. They’re like venture capital investments. They’re not going to survive, but there’re also a fair number of small pump-and-dump schemes and other things in this. And of course, we’ve lived through a few years where they became notorious, but they’re in jail, the Sam Bankman-Frieds and the CZs and the Do Kwons, where tens of billions of dollars were lost by investors,” the SEC Chair further said.
As Gensler prepares to step down on Jan. 20, his exit aligns with Donald Trump’s inauguration and heightened calls for stricter oversight in the cryptocurrency space. Gensler has consistently criticized crypto firms for their lack of transparency and failure to adequately protect investors. Under his leadership, the SEC initiated over 100 enforcement actions related to cryptocurrencies, surpassing the 80 cases brought by his predecessor, Jay Clayton. These efforts led to some defeats and culminated in actions against prominent firms like Coinbase Global Inc., solidifying Gensler’s reputation as an aggressive enforcer.
When asked about his satisfaction with the SEC’s work on the cryptocurrency industry, Gensler responded:
It’s a field that built up around non-compliance, and I’m proud of what we’ve done and building on the work of previous SEC administrations. I think there’s still work to be done.
In his final weeks, Gensler has reportedly taken steps to ensure his regulatory policies endure. According to former SEC official John Reed Stark, Gensler has quietly promoted top crypto-focused attorneys to senior roles, solidifying a hardline enforcement stance that may continue even after his departure.
Meanwhile, U.S. Senator Tim Scott (R-S.C.) has vowed to reverse the damage caused by SEC Chair Gary Gensler’s policies, which he criticized for negatively affecting capital markets and the broader economy. Scott endorsed Paul Atkins, President-elect Donald Trump’s nominee to lead the SEC, as an advocate for financial innovation and lighter regulation. While Atkins is expected to adopt a friendlier tone toward the industry, Stark warned that crypto firms should prepare for ongoing scrutiny from Gensler’s appointees, who are poised to maintain significant influence. The transition marks a pivotal moment for the digital assets sector, balancing optimism for regulatory relief with continued vigilance.
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