KEY POINTS
- Alderoty said Gensler underestimated the resistance and resilience of the crypto industry
- The Ripple executive added that Gensler thought has was ‘above Congressional oversight’
- Congress has shown increasing interest not just in the crypto sector but also in the regulatory approach of the SEC
U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler has been under increased scrutiny in recent years amid the regulatory agency’s crackdown on the cryptocurrency industry, and an industry expert laid out how he thinks Gensler got to a point where he is “struggling” amid political interest in the fast-rising sector.
Stuart Alderoty, the chief legal officer of Ripple, the crypto company behind the XRP token, said Gensler “overplayed his hand” and underestimated the emerging fintech industry as an “easy target” for the Wall Street regulator.
Gensler overplayed his hand. He thought crypto was an easy target. He relished being the guy that everyone loved to hate. He thought he was above Congressional oversight. That’s all gone. He’s now a struggling political liability. https://t.co/Uy6Mwed6hJ
— Stuart Alderoty (@s_alderoty) May 22, 2024
Alderoty might be true, considering how a growing number of crypto giants, Ripple included, have pushed back against the SEC’s lawsuits and allegations of unregistered securities sales and operations.
“He relished being the guy that everyone loved to hate. He thought he was above Congressional oversight,” the Ripple executive added, seemingly referring to how a growing number of lawmakers have been calling out the SEC for its regulatory “overreach.”
Just last week, both the House of Representatives and Senate passed a resolution revoking SEC Staff Accounting Bulletin 121 (SAB 121), which requires digital assets custody firms to hold their clients’ assets in their balance sheets.
Sen. Cynthia Lummis, R-Wyo., said the Senate vote should have been avoided if Gensler was “willing” to revise SAB 121. She added that the vote’s results only displayed a “clear rebuke” to how Gensler’s SEC has “persecuted” the industry.
Alderoty said Gensler’s time as the regulatory leader who enjoyed his time as a hated figure was over. “He’s now a struggling political liability.”
His comments may be related to the recent actions of some Democratic lawmakers, who have shown a shifting stance regarding crypto regulation.
On Tuesday, at least eight Democratic members of the House wrote in an internal memo to their colleagues that FIT21 was a “crucial” step toward regulating the booming crypto sector.
It is worth noting that Gensler expressed opposition to the bill, saying FIT21 would “create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”
Despite his opposition, the House passed the proposed legislation Wednesday, with a significant 71 Democratic members voting Yes. Alderoty previously said, during the passage of the resolution repealing SAB 121, that innovation “shouldn’t be a partisan issue” and the vote only proved this, considering how there were also Democrats who wanted the bulletin thrown out. “Glad to see that Ds and Rs can agree on one thing at least: Gensler’s SEC is out of control,” he wrote.
