Protocol | Fintech

Gary Gensler is not your daddy, and other lessons from the Senate hearing

Some senators gave Gensler a hard time, while others urged him to take more action to rein in crypto.

​Gary Gensler at a 2013 hearing.

SEC Chair Gary Gensler was grilled Wednesday by members of the Senate Banking Committee.

Photo: Andrew Harrer/Bloomberg via Getty Images

Gary Gensler was back at the Capitol Tuesday for a round of intense and sometimes caustic grilling in what is turning into a high-profile — and controversial — stint as chairman of the Securities and Exchange Commission.

Gensler fielded questions and comments from members of the Senate Banking Committee who alternately said he was making life too hard for the crypto industry or wasn't doing enough to rein it in. And there were those who were upset by his push for more corporate disclosures on climate change.

"The people and the companies that you regulate as chairman of the SEC, do you consider yourself to be their daddy?" Sen. John Kennedy asked Gensler.

"No," Gensler answered.

"Then why do you act like it?" Kennedy shot back. "Why do you impose your personal preferences about cultural issues and social issues on companies. … I'm sure you have you have personal feelings about abortion. Do you have plans to implement or impose those values on companies?"

"Sir, I think I am not doing that," Gensler said. "What I've been trying to do is say, if investors want information about climate risk, we at the SEC have a role to put something out to notice and comment, do the economic analysis and really see what investors are saying."

Many of the questions, though, focused on the hottest topic that the SEC has been grappling with since Gensler took over in April: crypto.

Gensler has taken a lot of heat for his views on bitcoin and other cryptocurrencies. Some digital tokens, he argues, are in fact securities that need to be regulated.

The SEC in December, before Gensler assumed the chairmanship, had sued Ripple executives, arguing that its XRP token was a security. Last week, Coinbase said the SEC has threatened to sue the crypto marketplace if it rolled out a crypto lending product.

But Sen. Pat Toomey said Gensler and the SEC have been vague on this issue.

"We need to have clarity on this," Toomey told Gensler. "We certainly shouldn't be taking enforcement action against somebody without having first provided that clarity."

Gensler disagreed. "I think that there's a fair amount of clarity over the years," he said. "I think at the heart of our securities laws [is] protecting investors against fraud. They get to decide. They get to take the risk. I'm not negative or minimalist about crypto. I just think it would be best if it's inside the investor protection regime that Congress laid out."

Gensler appeared to have an easier time with the questions from Sen. Elizabeth Warren, one of the most outspoken critics of the crypto industry.

"Chair Gensler, advocates say crypto markets are all about financial inclusion, but the people who are most economically vulnerable are the ones who are most likely to have to withdraw their money the fastest when the market drops. Does this sound like the path to financial inclusion to you?" she asked.

"It's a highly speculative asset class, it doesn't sound like the path that you mentioned," Gensler said.

Warren clearly sought action from the SEC chair. "Regulators need to step up" in dealing with the rise of crypto and "ensure that we're actually building the inclusive financial system that we need," she said.

She's been pushing major federal agencies, including the SEC, the Treasury Department and the Consumer Financial Protection Bureau, to get their act together in coming with new rules to deal with crypto.

"Chair Gensler, I expect you and the SEC to take a leading role in getting this done," Warren said.

"Thank you," said Gensler.

Warren and Gensler exchanged letters this summer about whether the SEC had enough authority to regulate crypto.

Protocol | Policy

Why Twitch’s 'hate raid' lawsuit isn’t just about Twitch

When is it OK for tech companies to unmask their anonymous users? And when should a violation of terms of service get someone sued?

The case Twitch is bringing against two hate raiders is hardly black and white.

Photo: Caspar Camille Rubin/Unsplash

It isn't hard to figure out who the bad guys are in Twitch's latest lawsuit against two of its users. On one side are two anonymous "hate raiders" who have been allegedly bombarding the gaming platform with abhorrent attacks on Black and LGBTQ+ users, using armies of bots to do it. On the other side is Twitch, a company that, for all the lumps it's taken for ignoring harassment on its platform, is finally standing up to protect its users against persistent violators whom it's been unable to stop any other way.

But the case Twitch is bringing against these hate raiders is hardly black and white. For starters, the plaintiff here isn't an aggrieved user suing another user for defamation on the platform. The plaintiff is the platform itself. Complicating matters more is the fact that, according to a spokesperson, at least part of Twitch's goal in the case is to "shed light on the identity of the individuals behind these attacks," raising complicated questions about when tech companies should be able to use the courts to unmask their own anonymous users and, just as critically, when they should be able to actually sue them for violating their speech policies.

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Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

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Antoine Nougue,Checkout.com

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Protocol | Fintech

When COVID rocked the insurance market, this startup saw opportunity

Ethos has outraised and outmarketed the competition in selling life insurance directly online — but there's still an $887 billion industry to transform.

Life insurance has been slow to change.

Image: courtneyk/Getty Images

Peter Colis cited a striking statistic that he said led him to launch a life insurance startup: One in twenty children will lose a parent before they turn 15.

"No one ever thinks that will happen to them, but that's the statistics," the co-CEO and co-founder of Ethos told Protocol. "If it's a breadwinning parent, the majority of those families will go bankrupt immediately, within three months. Life insurance elegantly solves this problem."

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Benjamin Pimentel

Benjamin Pimentel ( @benpimentel) covers fintech from San Francisco. He has reported on many of the biggest tech stories over the past 20 years for the San Francisco Chronicle, Dow Jones MarketWatch and Business Insider, from the dot-com crash, the rise of cloud computing, social networking and AI to the impact of the Great Recession and the COVID crisis on Silicon Valley and beyond. He can be reached at bpimentel@protocol.com or via Signal at (510)731-8429.

Protocol | Workplace

Remote work is here to stay. Here are the cybersecurity risks.

Phishing and ransomware are on the rise. Is your remote workforce prepared?

Before your company institutes work-from-home-forever plans, you need to ensure that your workforce is prepared to face the cybersecurity implications of long-term remote work.

Photo: Stefan Wermuth/Bloomberg via Getty Images

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So far in 2021, CrowdStrike has already observed over 1,400 "big game hunting" ransomware incidents and $180 million in ransom demands averaging over $5 million each. That's due in part to the "expanded attack surface that work-from-home creates," according to CTO Michael Sentonas.

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Michelle Ma
Michelle Ma (@himichellema) is a reporter at Protocol, where she writes about management, leadership and workplace issues in tech. Previously, she was a news editor of live journalism and special coverage for The Wall Street Journal. Prior to that, she worked as a staff writer at Wirecutter. She can be reached at mma@protocol.com.
Protocol | Enterprise

How GitHub COO Erica Brescia runs the coding gold mines

GitHub sits at the center of the world's software-development activity, which makes the Microsoft-owned code repository a major target for hackers and a trend-setter in open source software.

GitHub COO Erica Brescia

Photo: GitHub

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Brescia joined GitHub after selling Bitnami, the open-source software deployment tool she co-founded, to VMware in 2019. She's responsible for all operational aspects of GitHub, which was acquired by Microsoft in 2018 for $7.5 billion in one of its largest deals to date.

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Tom Krazit

Tom Krazit ( @tomkrazit) is Protocol's enterprise editor, covering cloud computing and enterprise technology out of the Pacific Northwest. He has written and edited stories about the technology industry for almost two decades for publications such as IDG, CNET, paidContent, and GeekWire, and served as executive editor of Gigaom and Structure.

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