Countdown to resignation! SEC Chairman Gary Gensler accepts a public interview, responding to 11 key questions regarding Crypto Assets and the Capital Market.

Author: Weilin, PANews

Only 6 days remain until Donald Trump is inaugurated as President of the United States. On January 14, SEC Chairman Gary Gensler gave consecutive interviews to CNBC and Yahoo Finance, and his leadership style and policy legacy became hot topics of discussion. Previously, Gensler had announced that he would resign from the SEC chairmanship on January 20.

Based on these two interviews, PANews has compiled 11 important questions regarding Crypto Assets and the Capital Market, as well as how Gensler responded to them.

1. On January 14, the U.S. Securities and Exchange Commission (SEC) took action against Robinhood and several private equity firms. With less than a week left in your term, can we expect more actions from the SEC?

We are mandated by the public to ensure that the Capital Market operates for them, protecting investors and ensuring that people comply with the law. We have an important responsibility and will fulfill this responsibility, regardless of who the leadership is. There will be different leadership transitions this week and next week, but we will continue to ensure that the Capital Market serves investors and that market participants comply with the law.

This is our work. Essentially, if we do not adhere to facts and laws, how can we establish trust in the Capital Market? In fact, honest actors in the market will benefit from this, as more investors are willing to enter the market and participate.

2. What do you think the next government means for the SEC? Are you concerned that the actions you take during your term will be overturned by the next government?

The achievements we have made during this government are very significant. I took office after the GameStop incident, at a time when there was a peak of special purpose acquisition companies (SPACs), and we implemented the most important reforms in the stock market. I would say that we, together with other commissioners, completed this reform in a unanimous and bipartisan manner. We also made significant reforms in the Treasury bond market. I cannot imagine anyone wanting to return to longer settlement cycles; we shortened the settlement cycle to one day.

I also can't imagine anyone wanting to withdraw the first federal privacy notice given to the public, stating that if your information is disclosed by an investment advisor or broker, you will be notified. I would dare say that I don't think anyone would want to withdraw these measures. They won't make it easier for company insiders to exploit significant non-public information for trading. So, I am very satisfied with the work we have done.

Of course, democracy has its consequences, and the next team may choose a different direction, but I believe these are all good policies for reducing costs and promoting the integrity of the Capital Market.

3. Some people believe that the supporters of Crypto Assets helped Trump win the latest election. How do you respond to these views?

It is important to establish trust in the Capital Market, and people need to comply with the laws passed by Congress, and this great institution enforces these laws. Think about this issue; we have rules on the highway, we have traffic lights, and we have patrol officers. If you are driving a hybrid car on the highway, does it not need to obey traffic regulations? Or does an electric vehicle not need to comply with the regulations on the highway? We consistently enforce laws in the financial markets as well, and the Crypto Assets sector is not compliant.

I also want to say that voters are smart enough to know that they vote based on other issues, such as inflation or other economic problems. I do not see any signs that Crypto Assets are a major factor influencing voter decisions.

4. You have achieved many accomplishments during your term, discussing reforms in shortening settlement cycles, money market funds, and the government bond market, among others. However, you lost 4 out of 5 challenges against your rules, a number that exceeds the total of the previous three chairpersons. Do you think there is anything you hope you could have done differently?

For anyone working in government, this is an interesting time as there are significant changes happening in the courts. The great hockey player Wayne Gretsky once said something along the lines of, you should skate to where the puck is going to be, not where it is. The courts here are like the puck; where are they heading? They are reinterpreting the law, whether it's environmental law, communications law, health law, or securities law.

We have been acting in accordance with the law and working based on the laws passed by Congress. We have established 46 rules that are very important to the Capital Market, the vast majority of which have not only been passed but are also being implemented. So people can now benefit from these rules, such as knowing whether corporate executives are receiving compensation based on erroneous financial reports and whether that information needs to be recovered. As you mentioned, we have made reforms in the currency market, but at the same time, the SEC can now obtain better information about private funds. So we have achieved a lot together.

5. You've warned about the risks of cryptocurrencies many times. Over the past year, the courts have somewhat compelled you to approve spot Bitcoin and Ethereum ETFs, opening up crypto investments to the general public. Would you like to have a different outcome? Does this expose investors to greater risk?

Bitcoin itself is not a security, and neither my predecessor nor I said that Bitcoin is a security, nor did I say that Ethereum is a security. I think that investors in Bitcoin and Ethereum, including what you call the general public, had the opportunity to invest in ETF products long before they were available. The ETF for Bitcoin, which was approved during my tenure, is a spot ETF that was launched later. Investors are better protected in spot trading products, with lower fees, tighter regulation, stock market monitoring, and these products are registered in line with SEC requirements. My predecessors had rejected these products, and we followed J. Brown's lead. J. Clayton's Leadership Ideas. Bitcoin and Ethereum account for 70% or even 80% of the crypto market. What I'm really looking at is the other part, those thousands of tokens, the condition for them to continue to exist, is that investors are essentially investing, or rather betting on a project, and they need to be properly disclosed. The law requires you to obtain such disclosures, but these tokens are not compliant at the moment. I'm not prejudging any one project.

6. It seems that you intend to separate Bitcoin from other parts of the industry. Have you started to develop a new perspective on Bitcoin? Do you believe that Bitcoin has intrinsic value and serves as a store of value? Or do you think that when looking back 10, 15, or 20 years from now, it will turn out to be like the tulip bubble of the 18th century? You have taught at MIT, so you should have some thoughts on this. You have read "The Bitcoin Standard," right?

It's hard to predict. I know how you view these other coins, and I know you have a negative opinion. But as for Bitcoin, our SEC has never said that it is a security.

Yes, (I've read it), I think Bitcoin is a highly speculative and volatile asset. But there are 7 billion people in the world, and everyone wants to trade it. Just like we've owned gold for 10,000 years, we own Bitcoin now, and there may be other similar things in the future. These thousands of other projects need to demonstrate their use cases and demonstrate that they have actual fundamentals, otherwise they won't be sustainable.

7. Don't you like those other coins?

I have never owned these coins, and I have been in this field for 7 or 8 years.

8. What is your view on the concept of prediction markets, especially regarding Kalshi hiring Trump's son as an advisor?

I have no opinion on who others hire. But the Capital Market itself is vast, with a $120 trillion Capital Market, whether it is stocks, bonds, or ultimately prediction markets, it is all about predicting future cash flows or forecasting future opportunities for businesses. Therefore, these markets are, in a sense, all about prediction markets, which is also why I am proud of some of the reforms we have implemented. We have implemented better information disclosure to ensure that only information meaningful to investors is disclosed, so they can make their own judgments about the future based on that information.

9. Critics argue that the SEC relies too much on litigation rather than legislation. What do you think?

We have laws. Congress has passed these laws, and of course they can change. But part of the encryption field involves the public investing based on these projects, many of which are regulated by securities laws. In this field, many companies do not comply with regulations. In the discussions you have every day, most of what you talk about are stocks, bonds, or a combination of market fundamentals, valuations, and sentiment. The encryption field seems to rely more on sentiment, with much less focus on fundamentals. But if there are fundamentals, and I say if, then appropriate disclosures need to be made according to securities laws. This is the basic trading rule.

10. What do you think is the biggest risk in the current market?

We are currently in a presidential transition period, and democracy has been reflected. Certain policies will become clearer over time, but there is certainly uncertainty regarding these policies. Over the past four years, I have also mentioned that there are areas in the Capital Market where there are many leverages, many loans, and low margins. Typically, these issues arise in the so-called repo market where commercial banks provide leverage for macro hedge funds. Finally, I believe that artificial intelligence has transformed productivity and positively impacted various fields, but there are still some risks in the future.

11. If you could do it all over again, what different decisions would you make?

I hope we can complete the reforms of the national debt market and the stock market as soon as possible, and that the related issues with the court can also be handled more smoothly. It is worth noting that the court's attitude is undergoing drastic changes. I really hope to better predict these changes so that we can do things that can better respond to the challenges posed by the court.