During a recent interview with Bloomberg, Gary Gensler made a bold statement saying
‘When it comes to cryptocurrencies, it’s all about Bitcoin, Ethereum, and the rest… Many of the 10K-15K cryptocurrency projects in existence will not make it. They resemble venture capital investments and a significant number of them are just small pump-and-dump schemes.’
Is the Alternative Coin Sector Doomed?
Gensler pointed out that market movements are chiefly driven by fundamentals and market sentiment. Nevertheless, a large portion of the 10K-15K alternative coin projects heavily rely on sentiment and might not survive in the long run. He also highlighted the presence of malevolent actors within the sector, specifically mentioning Do Kwon, Sam Bankman-Fried, and CZ, the founder of Binance.
While this assessment may hold truth, there are also numerous projects demonstrating a strong product-market fit, such as Solana’s Hivemapper (comparable to Google Maps) and the cost-effective cross-border transactions enabled by Tron and Ton blockchains.
Despite this, regulatory clarity concerning the status of these networks has been lacking during Gensler’s tenure. Instead of providing clear guidelines, the regulatory authority opted for stringent enforcement actions which, as insiders claim, hindered innovation and possibly even contributed to Donald Trump’s presidential victory following his endorsement of the industry.
Currently, legal battles are underway involving major crypto firms like Coinbase, Binance, Ripple Labs, and Uniswap, which has been warned of potential legal repercussions.
Consequently, Gensler is widely regarded as an adversary by a majority of the cryptocurrency community. However, he takes pride in his legacy and the enforcement actions taken, arguing that the sector is fundamentally based on non-compliance. Gensler remarked,
‘The cryptocurrency sector thrives on non-compliance, and I stand by our efforts. There is still much work to be done, particularly in regulating these 10K-15K alternative coins and the intermediaries involved.’
Gensler also emphasized that the sector is highly volatile yet lacks proper disclosures.
With the imminent transition to a pro-crypto leadership under Paul Atkins in approximately two weeks, the industry awaits to witness whether the new regime will provide a clearer regulatory pathway for the sector.