Whether Gensler will more open-minded toward a bitcoin ETF than his predecessor, Jay Clayton, is uncertain, but the stakes are enormous. Bitcoin rose for a seventh straight day this morning, hitting an all-time record high of more than $63,900. That record comes as Coinbase, the largest U.S. crypto exchange, prepares to list on the Nasdaq.
When pressed by Senators March 2 regarding how he plans to regulate bitcoin and other digital assets, Gensler said he plans to remain “technology neutral” while preserving capital formation and investor protection.
“With bitcoin, if it’s a commodity, it’s either for the Commodities Futures Trading Commission to regulate or Congress to determine. ... I think technology and markets constantly change and evolve and that it’s important for the SEC to provide guidance and clarity,” said Gensler, who noted that custody of funds with regard to digital assets is one area needing greater guidance."
Financial Services Institute (FSI) President and CEO Dale Brown congratulated Gensler and said his breadth of industry and regulatory experience will be “valuable” in guiding the SEC and expanding upon its recent accomplishments, including the implementation of Regulation Best Interest.
“We encourage Chairman Gensler to build upon Reg BI's success and preserve its effectiveness for both financial advisors and the Main Street Americans they serve,” Brown said in a statement. “We also ask that he ensures the commission provides clear, consistent rulemaking and enforcement that is workable for all stakeholders. We look forward to working with Chairman Gensler toward our shared goals of investor protection and effective regulations.”
Investment Adviser Association (IAA) President and CEO Karen Barr congratulated Gensler and said, “he is an experienced regulator with a wealth of knowledge and expertise regarding securities regulation and markets. We look forward to working with him, his fellow commissioners, and SEC staff on the critical issues affecting investment advisers and their clients.”
One top concern the IAA will seek to influence is how Gensler handles environmental, social and governance (ESG) requirements for advisors and funds. Biden has called for swift action on the “climate emergency” and SEC Acting Chair Allison Herren Lee has already indicated that the SEC will focus on greater transparency and how corporate actions may be affecting the climate.
SEC examiners said last week they are finding “unsubstantiated” and "potentially misleading" statements and questionable practices from some investment advisors, investment companies and private funds offering ESG products and services, according to a new agency risk alert.
“Firms claiming to be conducting ESG investing need to explain to investors what they mean by ESG and they need to do what they say they are doing. This same rule applies no matter what label an advisor puts on its products and services,” Herren Lee said in a statement, vowing that targeted exams will continue.
In a recent speech, Herren Lee also argued that even political spending disclosure can be linked to ESG issues.