Behind Closed Doors Gensler Was Not Anti Crypto: McHenry

Former US Representative Patrock McHenry suggested that Gensler’s public hostility was politically motivated. Meanwhile, Senators Cynthia Lummis and Bernie Moreno are pushing the Treasury Department to revise corporate crypto tax rules, and warned that taxing unrealized gains on digital assets harms US competitiveness. Also in the US, Sam Altman’s Worldcoin project is facing more backlash over privacy concerns as it rolls out iris-scanning verification hubs in the country. The patchwork of state biometric laws is also making things more difficult for the project to gain traction.

Gensler Accused of Playing Politics on Crypto

Former US Securities and Exchange Commission (SEC) Chair Gary Gensler may have had a much more favorable view of crypto in private than his public actions suggested. This is according to former US Representative Patrick McHenry. 

On the Crypto in America podcast on May 13, McHenry recounted some of his private interactions with Gensler, and revealed that the former SEC chair expressed a nuanced understanding of digital assets behind closed doors. “Did he come across, or was he as anti-crypto in private as he was in public?” McHenry was asked. “No… Nope,” he responded, adding that Gensler “saw the value of digital assets” and acknowledged the promise of blockchain technology, particularly during his academic tenure at the Massachusetts Institute of Technology.

Former US Representative Patrick McHenry

Gerald Gallagher, general counsel at Sei Labs, supported this view by pointing out Gensler’s lesser-known academic contributions, including his involvement in shaping the concept of the airdrop. Despite these insights, McHenry said he was dismayed by the shift in Gensler’s posture once he assumed leadership at the SEC in 2021. 

During his tenure, Gensler spearheaded more than 100 enforcement actions against crypto companies, which is a strategy that drew widespread criticism from industry leaders and politicians. McHenry described discussions with Gensler as perplexing, and said that while conversations would begin constructively, they would often descend into contradictions. He suggested Gensler’s hardline public stance may have been driven more by Senate confirmation dynamics than personal conviction.

Gensler officially left the SEC on Jan. 20, 2025, after which he returned to MIT to teach courses on fintech and AI. Unfortunately, his time at the SEC left a trail of industry resentment. 

In late 2024, Coinbase CEO Brian Armstrong announced the company would cut ties with law firms employing former SEC officials who participated in what he described as a campaign to “unlawfully kill” the crypto industry. Similarly, in early 2025, Gemini declared that it would no longer hire MIT graduates unless the institution severed ties with Gensler.

Senators Push Treasury for Crypto Tax Relief

While Gensler’s actual stance on crypto is still unclear, other lawmakers are making their voices heard. Two US senators urged the Treasury Department to revise how corporate taxes apply to digital assets. They believe this move is  necessary to preserve America’s competitive edge in the digital finance space. 

In a letter dated May 12, Senators Cynthia Lummis and Bernie Moreno called on Treasury Secretary Scott Bessent to amend the definition of “adjusted financial statement income” under current law. Their proposal seeks to ease the tax burden that is imposed by the Inflation Reduction Act, which levies a 15% minimum tax on corporations earning over $1 billion in profits for three consecutive years. Under the current framework, companies could be taxed on unrealized gains from crypto holdings, which is a prospect that Lummis and Moreno argue puts US firms at a disadvantage compared to their international peers.

Lummis is a longtime advocate for digital asset innovation, and she placed a lot of emphasis on the importance of quick action in a May 13 social media post. She warned that failure to adapt could threaten the nation’s leadership in digital finance. 

(Source: Follow the Crypto) 

Moreno is a freshman senator whose campaign was supported by crypto-aligned political action committees, and had similar concerns in the letter. Both senators argued that modifying the tax code could provide much-needed relief to corporations investing in digital assets.

This initiative comes amid wider legislative efforts related to crypto, including renewed attempts to pass the GENIUS Act — which is a bill that is aimed at creating a regulatory framework for payment stablecoins. A May 8 motion to consider the bill in the Senate stalled after Democrats objected to former President Donald Trump’s connections to the crypto industry. Despite the setback, Lummis indicated that she will continue to support advancing digital asset regulation and suggested the Senate could revisit the stablecoin bill vote.

Worldcoin Raises Alarms in US Privacy Debate

Meanwhile, regulators are more uncertain about World Network, the digital identity and crypto project launched by Sam Altman’s OpenAI. It is facing mounting global criticism and regulatory scrutiny as it prepares for its launch in the United States. 

Formerly known as Worldcoin, the initiative uses iris-scanning technology to create a unique digital identity for users, which the company claims will help distinguish humans from AI in an increasingly automated world. However, privacy advocates argue that the project poses a serious threat to personal freedom and security, and warned that biometric data collected could be used for profiling, surveillance, and discrimination.

Despite its promise of privacy protection, World has already been banned in countries like Spain, Brazil, and Hong Kong, while authorities in India, South Korea, Kenya, Germany, and others have launched investigations or ordered the deletion of user data. Critics claim the project offers insufficient transparency, targets vulnerable populations, and fails to offer clear consent withdrawal mechanisms. Additionally, Privacy International and Amnesty International both warned that without strict legal frameworks and oversight, biometric data collection initiatives like World risk enabling mass surveillance and eugenics-based profiling.

World now plans to expand into the US and establish verification hubs in Atlanta, Austin, Los Angeles, Miami, Nashville, and San Francisco, where users can scan their irises to obtain digital IDs. Yet the project faces a very complex patchwork of biometric privacy laws that vary a lot between states. 

World’s orbs

Only California and Texas currently have state-level protections for biometric data, and enforcement in Texas is limited to the attorney general’s discretion. Legal experts warn that users in states without these kinds of protections are particularly vulnerable, as there is no federal law specifically governing the collection of biometric data like iris scans.

Cyberlaw attorney Andrew Rossow explained that user protections depend heavily on the willingness and capacity of local authorities to act, which may vary widely. While Ethereum community figures like Tomasz Stańczak and Paul Dylan-Ennis have voiced cautious optimism about World’s privacy protocols, others are still deeply skeptical.