SEC Signals New Crypto Strategy by Dropping Ripple Appeal Under Gensler

The SEC’s recent withdrawal of enforcement against Ripple, Coinbase, and Kraken marks a shift from its rigorous regulatory stance under Gary Gensler. Gensler warns that 99% of cryptocurrency value is sentiment-driven, predicting many tokens will decline, unlike Bitcoin (BTC). The relaxed regulatory pressure has generated optimism in the crypto industry, yet Gensler’s scepticism about the long-term viability of most digital assets remains.

The U.S. Securities and Exchange Commission (SEC) has recently reversed its enforcement actions against major cryptocurrency entities such as Ripple (XRP), Coinbase (COIN), and Kraken, signifying a shift in regulatory policy that contrasts with former Chair Gary Gensler’s more aggressive tactics. This development is generating optimism within the crypto sector as it reduces regulatory pressures and poses questions about future policies regarding digital currencies.

In a CNBC interview, Gensler noted that 99% of cryptocurrency value is sentiment-driven and warned that the majority of the estimated 10,000 to 15,000 digital tokens may lose value. He highlighted Bitcoin (BTC) as a possible exception, linking its continued appeal to consistent public interest, while maintaining scepticism over the long-term prospects of most cryptocurrencies, which he likened to the fleeting popularity of temporary trends.

The recent approval of U.S.-based spot Bitcoin ETFs during Gensler’s tenure has merely transitioned institutional adoption, yet his reservations about the overall cryptocurrency market persist. He likens enduring metals like gold to Bitcoin, emphasising that the proliferation of numerous cryptocurrencies lacks similar fundamentals necessary for sustained value, thereby complicating their establishment as a stable asset class.

The SEC’s withdrawal from pursuing cases, including its appeal against Ripple Labs, represents a notable departure from Gensler’s stringent regulatory approach. Although the rationale behind this pivot remains publicly unexplained, the decision has led to a surge of optimism among industry leaders. CNBC host Andrew Ross Sorkin noted that many crypto executives are taking symbolic ‘victory laps’ in light of these developments. Nonetheless, Gensler’s cautious outlook implies that regulatory and market challenges still loom large, as the sector attempts to harmonise innovation with the demands for investor protection and market stability. The evolving landscape will likely dictate the future of digital assets, with Bitcoin and a few select tokens poised to maintain a foothold in a tumultuous market.