In a significant development during the Practicing Law Institute and the 56th Annual Institute on Securities Regulation in New York, US SEC Chair Gary Gensler suggested a possible departure from the agency. This revelation has sparked discussions among crypto enthusiasts and market analysts alike, given the profound implications for the cryptocurrency regulatory environment.
Understanding Gensler’s Stance on Cryptocurrencies
Gensler’s tenure at the SEC has been marked by a clear distinction between different types of digital assets. In his recent speech, he reiterated that Bitcoin, Ethereum, and stablecoins do not fall under the category of securities. This classification aligns with the broader industry consensus and provides some clarity for these major cryptocurrencies. However, Gensler emphasized that over 10,000 altcoins, including Ripple’s XRP, are considered securities based on the Howey test. This legal standard is used to determine whether a transaction qualifies as an investment contract.
“Our focus has been on the myriad digital assets, many of which courts have ruled were offered or sold as securities,” Gensler stated. Highlighting the vast scope of the market, Gensler pointed out that aside from Bitcoin, Ethereum, and stablecoins, the remaining crypto market is valued at approximately $600 billion. This figure represents less than 20 percent of the entire crypto market and a mere fraction of the global capital markets.
End of an Era
For many in the cryptocurrency community, Gensler’s speech marked the end of an era. His concluding remarks were poignant, as he reflected on his time at the SEC. “It’s been a great honor to serve with them, doing the people’s work, and ensuring that our capital markets remain the best in the world,” he noted. With the political landscape shifting following the election of pro-crypto leaders like President-elect Donald Trump, the SEC is poised to undergo leadership changes that could significantly impact its regulatory approach to cryptocurrencies.
Already, 18 U.S. states have initiated legal action against the SEC under Gensler’s leadership, accusing the agency of overstepping its mandate concerning crypto regulations. Stuart Alderoty, a vocal critic, tweeted about Gensler’s tenure, expressing hope for a new direction in the SEC’s handling of digital assets.
Impact on the XRP Market
The XRP market has been significantly impacted by the regulatory actions of the SEC. Despite a recent court ruling that XRP sales through crypto exchanges do not constitute investment contracts, the SEC has appealed, further complicating the market landscape. However, the potential shift in SEC leadership under Trump’s administration is anticipated to bring changes to the regulatory environment affecting XRP.
Interestingly, the market dynamics for XRP have shown bullish trends recently. Whale investors, or large holders of XRP, have been accumulating the asset, leading to a significant price increase. According to market data, XRP’s price has surged over 47 percent this week, trading at approximately 82 cents during the early Asian session on Friday. This positive sentiment is likely driven by strategic investor moves and anticipated favorable regulatory changes.
