The Money Game: Jen Wieczner
New York magazine|September 13 - 26, 2021
The Antiquarian’s Approach to Crypto Wall Street’s top cop wants to police new finance with old rules.
JEN WIECZNER

WHEN FINANCIAL REGULATORS demonstrate that they hold generous views of bitcoin—that, contrary to the prevailing mood in Washington, they believe digital currencies could be more than a conduit for laundering money and buying fentanyl online—the crypto faithful honor them with affectionate nicknames. J. Christopher Giancarlo, who, as chairman of the Commodity Futures Trading Commission, green-lit bitcoin derivatives, became Crypto Dad. At the Securities and Exchange Commission, the libertarian-leaning Hester Peirce got tagged Crypto Mom, and her colleague Valerie Szczepanik is the Crypto Czar. In January, upon the news that the Biden administration wanted the SEC to be chaired by Gary Gensler, a Goldman Sachs alum turned regulator who had taught blockchain and crypto courses at MIT for years, a similar term of endearment seemed imminent. Professor Crypto, perhaps?

Before long, though, Gensler shattered any illusions that the crypto industry had one of its own as the top cop on Wall Street. “This asset class is rife with fraud, scams, and abuse,” he said in a scathing speech comparing the digital-coin realm to the “Wild West.” Five months into Gensler’s tenure, Wall Street veterans and bitcoin outsiders alike are still trying to figure out where he stands. (“Some really sketchy behavior coming out of the SEC recently,” Coinbase CEO Brian Armstrong carped on Twitter last week after a dispute over-regulating a new product.) Recently, when I pointed out this dissonance to Gensler—that he had gone from finding crypto fascinating in the lecture hall to scary in the real world—I accidentally doubled his cowboy cliché. He quickly corrected me. “I used one ‘Wild!’” he said. “I used one!”

Gensler, 63, was sitting at a computer in front of a paned glass door and, beyond it, a verdant, tree-lined yard. For weeks, SEC staff have had the option of going into the office, but Gensler is content to work remotely. After losing his wife of two decades to cancer 15 years ago, he’s dating again; he was Zooming in from his girlfriend’s house, though he declined to say where it is. Following a stint in the Treasury Department during the Clinton era, and before serving as head of the CFTC under Obama, Gensler spent the last years of his wife’s life as a “stay-at-home dad” to their three daughters, and he still carries that vibe. “During ’01 to ’07,” he says, “I was pretty much off the grid.”

Gensler is a traditionalist in the sense that he believes the laws currently governing the market, which date back to the Great Depression, are sufficient to handle modern inventions like bitcoin. There’s no need to rewrite the rules: The crypto exchanges should register with the government, regulators can decide whether various digital coins are actually securities (like stocks) by applying the historic standard known as the Howey Test, and discourse on Reddit isn’t so different from the early days of radio. He enjoys making references to antiquity.

In other ways, Gensler fashions himself a progressive. He’s the first SEC chief to fully reject the “chairman” title in favor of the gender-neutral “chair.” (Mary Schapiro, the agency’s first female head, is still listed as chairman in her official bio.) He had his team contact The Wall Street Journal to ask for a correction when it used the old title, which the paper refused to make on grounds of editorial style. Gensler also resolutely refers to Satoshi Nakamoto, the unknown creator or creators of bitcoin, as “she”—as well as “Nakamoto-san,” out of reverence for the innovation. He has decidedly less fondness for some of the newer market trends being pushed to amateur investors, whether they be Robinhood’s so-called commission-free trading or special-purpose acquisition companies, better known as spacs.

You were nominated at close to the height of meme-stock mania, when it looked as if the markets had gone totally nuts. What were you thinking as you waited to get confirmed?

I was thinking of it in terms of regular investors. Neither of my parents went to college, and I’m deeply a markets person; I don’t know what it is. My dad had a small business serving the bars of Baltimore—cigarettes, pinball tables, jukeboxes. He would toss us Value Line tear sheets when I was in middle school and say, “What do you think?” He never had much money, but he might buy 50 shares of something. So I thought of it in January as I think of it now—How is it playing out for retail investors?

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