President Biden’s team confirmed in mid-January that they will be tapping Gary Gensler for the Securities and Exchange Commission chair. They will also be nominating Rohit Chopra to lead the Consumer Financial Protection Bureau. The two had a confirmation hearing in front of Senate committees last week and are slated for a confirmation vote in front of the full Senate soon.

In late 2020, rumors of Gensler’s nomination sparked buzz amidst the financial sector, especially as it looked like Gensler, a former Goldman Sachs partner turned tough Wall Street regulator, would emphasize crypto and prioritize implementing a regulatory framework for the technology that has largely been ignored up until now.

Wall Street Watchdog

Gensler previously served as the chair of the CFTC (Commodities Futures Trading Commission) under former President Obama from 2009-2014, during which he was tasked with handling key regulatory issues in the fallout of the 2008 financial crisis. Under his watch, he earned a reputation of being a tough Wall Street watchdog, reforming the $400 trillion derivatives market and bringing charges against major financial institutions.

These actions have caused many Republicans to raise concerns about the potential of Gensler overreaching as SEC chairman.

“At the CFTC, Mr. Gensler had a history of pushing the legal bounds of the agency’s authority,” said Sen. Patrick J. Toomey (R-PA), the top Republican on the Senate Banking Committee, at Gensler’s confirmation hearing last week.

Cryptocurrency

After his stint as CFTC chair, Gensler delved into the world of crypto, joining the faculty at MIT Sloan in 2018 and even teaching a course on cryptocurrency. If confirmed, Gensler would bring much needed expertise to the position at a time where cryptocurrencies are exploding in popularity and more and more altcoins are being released by the day.

The SEC plays a fundamental role in regulating cryptocurrency, primarily with categorizing whether or not cryptos should be deemed securities, and therefore determining which regulations cryptos would be subject to. Gensler’s predecessor, Jay Clayton, stated that Bitcoin and Ether did not classify as securities, but made no clarification for other popular currencies such as Ethereum or Ripple. Gensler has stated that “we want to ensure that there’s appropriate investor protection” for cryptos that could be considered securities.

Furthermore, in the wake of the GameStop maelstrom, lawmakers are calling on the SEC to safeguard against market manipulation. “It is time for the SEC to get off their duffs and do their jobs,” Sen. Elizabeth Warren (D-MA) said.

Emphasis on ESG

During the confirmation hearing on March 2, Gensler indicated that he would be open to requiring companies to increase disclosure on climate-related risks. Gensler may also be looking to encourage ESG investing, a stance that would be in line with Biden’s aggressive climate policies.

Republicans worry that Gensler could be overreaching once again. “The securities laws are not the appropriate vehicle to regulate climate change nor to correct racial injustice or intimidate companies regarding political spending,” said Toomey in his opening statement. “That is why we have environmental, civil rights and political spending laws.”

Democrats argue the SEC is in a prime position to progress climate initiatives. “The next chair of the SEC will need to focus on enforcement and improving accountability and transparency, including by working to enhance corporate climate risk disclosure,” said Sen. Sherrod Brown (D-OH), who serves as the Senate Banking Committee Chairman.

“This entire administration is prioritizing climate change with respect to what each agency can bring to the table to help us in the fight against climate change—and the SEC has a really critical role in that regard,” said Mary Schapiro, the former SEC chairwoman under Obama who worked with Gensler when he was at the CFTC.

ABOUT THE WRITER

Lydia You is a computer scientist from Princeton University living in New York City. She is a Tech Innovation Fellow at Identity Review covering the intersection of global tech policy, internet culture and the future of digital media.

Contact Lydia You at lydia@identityreview.com.

Do you have information to share with Identity Review? Email us at press@identityreview.com.