(Last Updated on January 20, 2021)
A quick rundown on his story.
Gary Gensler has had a storied career, growing from the corporate finance sector and working his way up the ladder at Goldman Sachs where became head of the mergers & acquisitions department.
Soon he became deeply entrenched in the regulatory and policy battles facing the financial industry and got more involved on that side. Serving as an advisor to a number of individuals on the U.S. treasury during the Clinton administration.
In 2009 he was hired as chairman of the United States Commodities and Future Trading Commission (CFTC) under the Obama administration. There he developed policy to regulate the widely scrutinized, “swaps market”, which at the time operated with about $400 billion in volume. Gary was also a major player in helping develop the Sarbanes & Oxley act in 2002 while acting as senior advisor to U.S Senator Paul Sarbanes.
Gary was awarded the “Alexander Hamilton award”, which is the highest honer from the Treasury department for his services through the years. This was followed up by another glaring award of the “Frankel Fiduciary Prize” in 2014.
He is still on the board of the New York Fed Fintech Advisory Group after a short stint as Chairman of the Maryland Financial Consumer Protection Commission in 2017 through 2019.
Most of his “political work” has been alongside Democratic party lines – he has helped both Obama and the Clinton’s in their campaigns and also while in the presidency. His work with the Clinton’s stemming back to when Bill Clinton was president and Gary was only assisting with major players in the U.S. treasury.
Now he has been a key figure in helping build Biden’s presidential campaign and future outlook.
Gary is quite telling in this recent MIT interview “What is the future of blockchain?”
Quotes from the video:
“Blockchain innovation that we subscribe to Satoshi Nakamoto is a database structure that is more temper resistant, harder to mess with it, but it comes with a cost. Secondly its this concept that you don’t have a central authority or central mediary, but naturally, do you really need the log and a block and consensus between multiple parties. And this question in finance, do we need a native token or currency?”
When the internet came along in the 90’s, people asked what is the “killer app”? Now everyone uses it for everything, but initially it was just for email.
Right now the killer apps have been crowdsourcing –
It’s a more permission less and cross border way to raise money. I think a lot of it is non-compliant with U.S. and other securities laws. It’s rife with scams and fraud, if we could tame that down and get it into some investor protection paradigm it’s still a interesting way to raise money.
Second use case has been pure speculation – call it what it is.
It is a store of value, and for some that gives them a diversification, it is not highly correlated with other asset classes.
I think those have been the ‘killer apps’ so far.
But it WILL change the world for payments – we are still a long ways away, I think we are years away, but I wouldn’t count it out.”
-> The main takeaway is that this is world changing technology, but it needs to be better regulated to protect future investors and eliminate fraud. He is well aware that blockchain will evolve the financial world into something different.
-> Bitcoin will not die – we need to onboard it properly and utilize it along with our current financial system
On illicit activity, terrorism and dark web funding in crypto
“The regulatory space, as with any new technology, is looking at this technology and trying to say, “will it live within public policy norms and frameworks?”
What does that broadly mean?
We don’t really want illicit activity to move to this new technology and in the U.S. and most countries it’s pretty clear that the tax regimes this is property and its not currency. The anti-money laundering and anti-terrorist regimes you have to keep track of who buys and sells this.
I think its pretty clear in that space.
I think where its less clear, if you wish, is in the investor protection space.
I think guarding against illicit activity, you still have to pay your taxes if you buy and sell this stuff. It’s property and you really can’t fund terrorist or try to promote the dark web or drug trafficking.
But investor protection in the U.S. in sense most ICOs are probably securities and most of them are capital raising functions and yet they are not really complying with securities laws.
And the exchanges who list those ICOs are not complying with securities laws in listing those securities.”
So basically a complete 180 from Janet Yellen and shows the difference in someone who understands Cryptocurrency and have researched them vs. an old lady who can barely turn on her T.V.
Gary is taking an informed, intelligent approach here realizing that the blockchain is a fully transparent public ledger and does not equal anonymously illicit funding 24/7/365.
He is certainly correct on his take of ICOs (initial coin offering) being used for scams and fraud. Anyone who was in the crypto space during 2017 realizes how many people got scammed and lost their investments to copy + paste cryptocurrency blockchains that did a name change and created a $100 website.
Gary Gensler teaches a course on Bitcoin, blockchain, and future potential
Course Description for “Blockchain and Money”
This course is for students wishing to explore blockchain technology’s potential use—by entrepreneurs and incumbents—to change the world of money and finance. The course begins with a review of Bitcoin and an understanding of the commercial, technical, and public policy fundamentals of blockchain technology, distributed ledgers, and smart contracts. The class then continues on to current and potential blockchain applications in the financial sector.
His most recent MIT articles are about cryptocurrency and the evolution of commercial banks
In these recent articles we can see small tidbits of how Gary has been predicting the evolution of banks from their current form to a digital one. And how this evolution will include regulation for cryptocurrency.
“I would be surprised if in 10 or 20 years, banks existed in their current form,” said Johnson, an economics and entrepreneurship professor at MIT Sloan and a former member of the Financial Research Advisory Committee of the U.S. Treasury’s Office of Financial Research. “The names may exist, but I think the structure of bank services will really be quite different because of the way technology is impacting it.”
Johnson said blockchain-based technologies have “presented a challenge to conventional systems” and “become a catalyst for change.”
“I don’t see regulators wanted to block change,” Johnson said. “I see them wanting to get some change they feel will be helpful and not disruptive”
The commercial U.S. banks of today realize they cannot stop Bitcoin and cryptocurrencies from evolving. (similar to the CFTC’s response on being unable to ‘ban’ Bitcoin)
But it cerainly sounds like they are frightened about losing their grasp on the financial industry and banking monopoloies of today.
So how will that look?
We’ll have to see.
Let’s watch some video from his MIT courses to see how he judges Bitcoin
-> Believes more regulation is needed – BUT – he believes in the fact that Bitcoin’s blockchain is a gamechanger
-> Clearly a fan of blockchain technology and all the advantages of a trustless, public ledger
-> He does not want to destroy Bitcoin, instead lay a base of foundational regulations that will protect individuals from scams and financial crimes