Kornelija Kazlauskas 
Gary Gensler who is the current chairman of the U.S. Securities and Exchange Commission (SEC) has emerged as a prominent figure in the crypto industry. Gensler’s journey began with the Biden government’s focus on digital asset regulation .
The Biden Decree and the Regulation of Stablecoins
The Biden government issued a decree in March 2022 regarding the oversight of digital assets, with a focus on stablecoins in particular. Due to the duty it bore to the public the government wanted to pass regulations via Congress. The collapse of the LUNA/UST stablecoin nevertheless rendered things more difficult since algorithmic stablecoins were tougher to regulate.
The Impact of the November 2022 Elections
The November 2022 elections resulted in the loss of a majority for Biden’s administration in the House of Representatives which derailed their plans for passing new regulations . This made it nearly impossible to pass the proposed stablecoin law in a divided parliament. The collapse of FTX further intensified the pressure on the government which created the need for action before the 2024 elections.
Plan B: Regulatory Lawsuits
Unable to pass new legislation the government went for a regulatory approach through lawsuits. Gensler shifted his rhetoric during this period and put emphasis on the evaluation of altcoins under the securities law of 1933. With the 2024 elections approaching it is expected that the regulatory process with the SEC will be completed this year. The US government aims to prevent capital from flowing into crypto due to market liquidity concerns .
Focus on Altcoins and the Path Forward
Regulating altcoins under existing laws allows the government to target specific cryptocurrencies while leaving Bitcoin untouched. The approval of a spot ETF for Bitcoin may be part of the strategy. Exchanges have become a target as banning them individually is impractical . By collectively reducing the number of coins available on exchanges the government aims to exercise greater control. However exchanges’ arguments in court may not hold strong and they rely on public interest and necessary legislation in Congress.
The difficulties and complications of regulating digital assets are interconnected with Gensler’s climb to prominence in the crypto sector . It is unclear how long the current strategy is going to hold up and how much impact it will have on the cryptocurrency market as the regulatory process proceeds.
