The American government is badly damaged — we need public servants who care more about right or wrong, especially when it comes to the crypto industry.
I’m not denying that there are reasonable questions about how crypto firms should be regulated. Many policy questions still require legislation to resolve. But, our current system is broken.
The Securities and Exchange Commission traditionally does not expose itself and its credibility to an appellate beatdown. But this SEC is different. This SEC and Chair Gary Gensler have an extra-regulatory anti-crypto agenda. And they are using their power to obstruct and delay the industry — imposing their own preferences where they can.
Gensler may not like bitcoin. But whether you decide to invest in bitcoin is up to you, not the SEC.
What’s going on with Gensler at the SEC is clearly a culture of bad faith against crypto.
Take January’s approval of spot bitcoin ETFs, which only came after years of good-faith applications from crypto industry participants. The SEC was helpless to explain or defend its decision to reject past spot bitcoin ETFs — not a leg to stand on, it was truly an embarrassment. The court then ruled that the SEC position was “arbitrary and capricious.” And ultimately, Chair Gensler was forced to vote to approve a bitcoin ETF he was hell-bent to obstruct.
Bitcoin ETFs from firms like BlackRock, Fidelity and Franklin Templeton provide a safe and easy way for US investors to buy bitcoin. They easily satisfy the SEC’s investor protection standards; they are in the best interest of the investors the SEC is sworn to protect. And three months after their launch, bitcoin ETFs hold $61 billion in assets.
Or, take the recent SEC vs DEBT Box fiasco. Two SEC lawyers leading an anti-crypto action were forced to resign after a federal judge sanctioned the agency for “gross abuse of power.”
The SEC misled the court to get a temporary restraining order against crypto firm DEBT Box. This action was ex parte — without any notice to DEBT Box. They violated the court’s trust.
Forced to resign? After that debacle, the SEC should have turned off the lawyers’ key cards before they got back to the office. But maybe they were following marching orders.
Where do we go from here?
This lack of communication between regulators and crypto participants has been going on for years, and needs to change. Many other issues in crypto could be navigated in good faith if regulators simply engaged with the industry.
Back in 2021, Coinbase CEO Brian Armstrong found that the SEC was the only government branch unwilling to meet with the firm. Coinbase is a public company. And it is now in litigation with the SEC relating to questions that could have been discussed and resolved in good faith back in 2021.
But good faith left the building when Gary Gensler walked in.
For example, take now the public spectacle of Gensler in front of Congress in April 2023, when he evaded the fundamental question of whether crypto’s second largest asset, ETH, is a security. Documents in the Consensys lawsuit against the SEC describe how the agency was pursuing an investigation into the nature of ETH days before Gensler testified.
Frustrating.
“Chair Gensler refused to answer questions regarding the SEC’s classification of ether,” Rep. Patrick McHenry (R-NC) said on X. “New court filings show this was an intentional attempt to misrepresent the commission’s position.”
Ethereum, established in 2015, has a market value of $457 billion. We should have a public statement from the SEC on this one. And to add to the federal regulatory charade, the Commodity Futures Trading Commission went to court this year claiming Ethereum is a commodity and not a security for the purpose of federal regulation. Do these guys talk to each other?
If the SEC thinks Ethereum is a security, why not just say it? That’s an important question. If you are not steeped in crypto, you may struggle to answer it. But regulatory clarity unlocks the potential of the industry. And Gensler does not want that to happen. He has an agenda unrelated to his job as a regulator, and he is backed by Senator Elizabeth Warren, founder of the “anti-crypto army,” the world’s smallest and most unpopular political unit.
Why should we care about crypto?
Here’s why: Crypto is a disruptive transition of the kind this country normally leads and dominates. Capital and talent are gravitating to the industry.
Crypto orchestrates the deployment of capital to overcome seemingly insurmountable barriers to entry. Look at how the US dollar stablecoin — the digital version of the US dollar with over $140 billion in circulation — is disrupting banking and payments. And incidentally, fostering the globalization of the dollar to the benefit of all Americans.
We need a good faith regulator to get in the room with the adults in the crypto industry. We need to move past untethered regulatory obstruction. Goodbye Gary Gensler, hello honest reform.
Anthony Scaramucci is the founder and managing partner of SkyBridge, a global alternative investment firm, and founder and chairman of SALT, a global thought leadership forum and venture studio. Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman in 2001. Earlier, he worked in Private Wealth Management at Goldman Sachs & Co. In 2022, Scaramucci was ranked #47 in Cointelegraph’s Top 100 Influencers in Crypto and Blockchain. In 2016, he was ranked #85 in Worth Magazine’s Power 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s New York Financial Services “Entrepreneur of the Year” Award. Anthony is a member of the Council on Foreign Relations (CFR) and a board member of the Federal Enforcement Homeland Security Foundation. He is the author of five books. Scaramucci served on President Donald J. Trump’s 16-person Presidential Transition Team Executive Committee, and in 2017 briefly served as Chief Strategy Officer of the Export-Import (EXIM) Bank and White House Communications Director. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.
