Economic Liberties Argues That Gensler Got It Right on Crypto

December 13, 2022 Press Release

Washington, D.C. — The American Economic Liberties Project today released a new policy Quick Take, “Gary Gensler Got It Right,” highlighting how Securities & Exchange Commission (SEC) Chair Gensler helped contain the crypto meltdown and protect the real economy from its effects. The release comes with hearings scheduled in the House and Senate this week to examine the decline of crypto firm FTX, and as regulators across the government step up efforts to address corporate power.

“Since the fall of FTX last month, crypto proponents have attempted to pin responsibility for the collapse on SEC Chair Gary Gensler instead of the industry’s own actions, a move intended to undermine robust regulation,” said Matt Stoller, Director of Research at the American Economic Liberties Project. “An honest look at Chair Gensler’s record reveals how his agency walled off much of the real economy from the destructive nature of the unregulated crypto space. Under Gensler, the SEC forced banks to account for crypto assets, prevented the creation of Bitcoin spot Exchange-Traded funds, stopped the sale of certain risky lending products, and blocked most crypto firms from accessing public markets.”

“Gensler became SEC Chair four days after Coinbase went public,” Stoller added. “He arrived too late to stop crypto from exploding, but his actions since he took office have been the model of a strong and effective financial regulator.”

Economic Liberties’ new Quick Take examines how Chair Gensler’s actions on crypto have so far been a regulatory success, despite what crypto proponents might say. The report argues that Gensler’s actions are a prime example of a regulator standing up for the public in the face of a powerful and wealthy industry. Cryptocurrencies could have caused a general financial crisis had regulators allowed crypto firm insiders to access more sources of capital from consumers and investors. If banks and investors had been allowed to invest heavily in this unregulated space, those banks would have faced a liquidity crisis to cover their losses when crypto collapsed.

Read the Quick Take, Gary Gensler Got It Right, here.

Learn more about Economic Liberties here.

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The American Economic Liberties Project works to ensure America’s system of commerce is structured to advance, rather than undermine, economic liberty, fair commerce, and a secure, inclusive democracy. Economic Liberties believes true economic liberty means entrepreneurs and businesses large and small succeed on the merits of their ideas and hard work; commerce empowers consumers, workers, farmers, and engineers instead of subjecting them to discrimination and abuse from financiers and monopolists; foreign trade arrangements support domestic security and democracy; and wealth is broadly distributed to support equitable political power.