You might think that Armstrong would be sending a thank-you note to Gensler for keeping him and his customers out of an incredibly risky business. Instead, Armstrong is leading a brigade that’s seeking, against all logic, to pin the blame for FTX on Gensler. The reasoning, which Armstrong laid out in a tweetstorm and a handful of media appearances, is that Gensler created a “lack of regulatory clarity” by saying that many crypto tokens were in effect illegal unregistered securities (in speeches, and, of course, in a lawsuit that alleged insider trading by a former Coinbase executive). This, according to the logic of Armstrong and crypto luminaries such as investor Katie Haun who have echoed the argument, pushed speculators to offshore exchanges, depriving law-abiding American exchanges like Coinbase of potential profit streams and the US of this awesome new financial innovation. (Fortune reached a similar conclusion, declaring “Gary Gensler blew it again,” just months after its cover asked if Bankman-Fried was “The Next Warren Buffett?”)
All of which is nuts. If anything, what happened with FTX vindicates the position of Gensler and other crypto skeptics. The lesson of the current crisis isn’t that you should be able to trade your savings account for a high-risk banking product without FDIC insurance, or that you should be able to use your 401(k) to buy Axie Infinity tokens, or that you should save for college by borrowing up to 20 times your savings to buy crypto futures. The lesson, as the antimonopoly researcher Matt Stoller has argued, is that Gensler and others were right to oppose these so-called innovations, and that we should listen to arguments that portray crypto as inevitable and/or empowering with extreme skepticism.
Source: FTX’s Collapse Validates Gary Gensler’s Crypto Skepticism – Businessweek
