The recent security breach that hacked the X account of the US Securities and Exchange Commission (SEC) to post a false approval of a Bitcoin spot exchange-traded fund (ETF) has sparked anger from crypto and Wall Street companies alike. It re-focused the public eye on what critics of chairman Gary Gensler have been calling gross overreach, with some implicitly calling for his resignation.
Gensler said on Wednesday that while artificial intelligence is a net positive for the industry, it comes with undeniable risks.
How SEC and Gensler Came to Target Crypto
However, many on Wall Street believe that Gensler is being ambitious. At the outset of his tenure, Gensler promised to bring stricter rules for crypto, stock markets, and climate change. His quest has attracted lawsuits at the heart of the SEC’s mandate to protect investors.
Read more: Who Is Gary Gensler? Everything To Know About the SEC Chairman
Gensler most recently signaled an intention to crack down on the use of AI in a webinar yesterday. He said the concentration of power in a few hands will cause risks in society and the financial sector. However, he did admit that financial regulators would not have the power to oversee the industry.
”I noticed that the Chief Justice of the Supreme Court, in his annual report, even spoke about AI. And so I think the awareness is raising, but I’ll stick to our lane of financial services, and particularly securities law,” Gensler said.
Crypto Boss Calls Gensler a “Political Liability”
The CEO of XRP issuer Ripple Labs, Brad Garlinghouse, recently opined that Gensler was a “political liability.” The SEC launched a case in 2020 against Ripple’s sales of XRP, one of the top five cryptocurrencies by market capitalization.
“I think he’s not acting in the interests of long-term growth of the economy, and I don’t understand it,” said Garlinghouse.
Garlinghouse says it is insanity to keep doing the same thing repeatedly and expecting a different outcome. Gensler has taken many crypto companies and projects to task but has lost two cases that strike at the heart of arguments about the securities status of crypto.
Ripple’s case, in which a court ruled that retail sales of XRP were not unregistered securities, and another case, in which a judge ruled that the SEC was wrong to deny a Bitcoin ETF based on market manipulation concerns, have dealt with Gensler’s SEC two damaging blows. Public outcry about the agency’s mischaracterization of the intentions of another cryptocurrency company, Debt Box, is also marring Gensler’s legacy.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
The SEC chair may be forced to exit his position if Republicans win the 2024 election. However, Gensler could complete his term until 2026 if Democrats win.
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