Author: NATHANIEL POPPER / Source: New York Times
SAN FRANCISCO — Gary Gensler was one of the top financial regulators in the Obama administration, the finance chief for Hillary Clinton’s 2016 presidential campaign and, before both of those jobs, a partner at Goldman Sachs.
Now, like many other big names from business and government, he is plunging into the world of the blockchain, the data-tracking technology introduced by Bitcoin.
Mr. Gensler, 60, has recently gone to work at the Massachusetts Institute of Technology, where he will write and teach about the potential he sees for blockchains to change the financial world.
He will also use his position to warn about how many of the current projects in the world of virtual currencies, including some of the biggest, are likely to face a significant moment of reckoning with regulators.
Mr. Gensler is set to say in a speech at M.I.T. on Monday that the second and third most widely used virtual currencies, Ether and Ripple, have most likely been issued and traded in violation of securities regulations in the United States.
“There is a strong case for both of them — but particularly Ripple — that they are noncompliant securities,” he said in an interview. He believes that Bitcoin, the original virtual currency, can remain exempt from securities regulations.
Mr. Gensler will be one of the most influential voices to weigh in on a series of questions that are likely to shape the future of the nascent industry.
The Securities and Exchange Commission and the agency that Mr. Gensler led from 2009 to 2014, the Commodity Futures Trading Commission, are in the middle of determining how to categorize and crack down on many of the virtual currencies created in recent years.
Most of the focus has been on smaller currencies that were issued through so-called initial coin offerings, or I.C.O.s, a method of fund-raising in which entrepreneurs sell custom virtual currencies.
But Mr. Gensler believes that better-known virtual currencies like Ether and Ripple should be in that conversation as well and should likely be categorized as securities, given the way they have been created and sold.
“2018 is going to be a very interesting time,” Mr. Gensler said. “Over 1,000 previously issued initial coin offerings, and over 100 exchanges that offer I.C.O.s, are going to need to sort out how to come into compliance with U.S. securities law.”
The people behind both Ether and Ripple have argued that their tokens are not securities. But there are signs that the S.E.C. could be receptive to Mr. Gensler’s argument. Regulators have indicated in private…
The post A Former Top Wall Street Regulator Turns to the Blockchain appeared first on FeedBox.