Podcast Summary: Inside Gary Gensler’s SEC — A Conversation with Former Crypto Policy Advisor Corey Frayer

Bankless Podcast | December 8, 2025
Hosts: Ryan Sean Adams & David Hoffman
Guest: Corey Frayer, former Senior Advisor on Crypto Policy to SEC Chair Gary Gensler

Overview of the Episode

This episode features an in-depth discussion with Corey Frayer, the former Senior Advisor on Crypto Policy at the SEC under Gary Gensler, now Director of Investor Protection at the Consumer Federation of America. Frayer provides a rare, candid look inside regulatory decision-making during one of the most contentious eras for crypto in U.S. history, sharing the SEC’s philosophy, enforcement rationale, and personal reflections on the industry’s evolution and regulatory friction points.

Main Themes

• Timeline and intent behind the SEC’s crypto policy 2021–2025
• The philosophical and legal basis for SEC enforcement against crypto projects
• Fundamental disagreement between crypto ethos and securities regulation
• Ongoing debate about DeFi, centralization, and the Howey Test
• The impact of SEC policy choices on crypto innovation and U.S. competitiveness
• Reflections on post-Gensler SEC direction and inter-industry perceptions

Key Discussion Points & Insights

1. Corey’s Role and Background at the SEC

• Corey describes entering financial policy during the 2008 crisis, working primarily on consumer protection and skepticism toward both Wall Street and crypto.
  • "I got my start in policy in 2007... you'd be hard pressed to find someone who has been more critical of the traditional financial services industry." (05:42)
• Chosen by Gensler for his technical and legislative background; led agency-wide crypto policy and coordinated among SEC divisions.

2. Misconceptions about SEC’s Crypto Policy

• Corey refutes the idea of a personal or political crusade against crypto.
  • "The biggest misperception I think is that we led an attack on crypto, that there was some kind of personal vendetta... driven by favorability to the traditional financial industry." (07:36)
• Enforcement moves were based on economic activity, not technology or personal animus.

3. Timeline & Strategic Shift in Enforcement

• David Hoffman/Ryan Adams recall a period (2021-2023) where SEC was seen as quiet, then suddenly hostile after FTX and scandals.
• Corey clarifies heavy ICO enforcement began under Jay Clayton (Trump’s SEC Chair), and Gensler’s SEC shifted focus to exchanges as the locus of systemic risk.
  • "We felt that playing whack-a-mole with 10,000 tokens wasn't going to be a productive use of our resources... If we wanted to get something done, where that would happen is the platform level." (17:34)
• SEC engaged with platforms to register and comply; "office hours" invitations to crypto companies were genuine, not traps.

4. The Registration Debate: Is Compliance Possible?

• Ryan & David articulate the crypto industry’s complaint that there is no viable way to register under current law—no applicable path for how their centralized (but "crypto-native") exchanges function.
• Corey insists there was a viable, though non-negotiable, path: echoing prior sectors, you cannot retain vertically integrated business models incompatible with securities law.
  • "That's just somewhere we weren't willing to go, and it's not somewhere we would go anywhere else." (29:41)

5. Decentralization & The Fundamental ‘Catch-22’

• David presses on the core crypto argument: projects start centralized but with the aim of decentralizing—SEC stifled their growth before this could happen.
  • "We were not ever allowed to fulfill our desired destiny of becoming an intermediary-less system because you still need to build this stuff." (33:20)
• Corey: "I'm...amazed at the discovery...that made Bitcoin work... If the crypto world had stayed in the space of electronic peer to peer transactions, I don't think the SEC would have ever gotten involved." (34:15)
• The problem arises, Corey says, only when crypto veers into traditional activities—raising public capital, acting as an intermediary, offering financial products to retail.

6. Clarity on ‘Investor Protection’

• The SEC’s “protection” mandate is not to bar risk or volatility for investors but centers on disclosure, fair dealing, and eliminating conflicts of interest.
  • "You do not want the SEC to be making decisions on behalf of investors...What you want to do is make sure that issuers of securities follow the laws that Congress has set forth..." (39:24)

7. DeFi: Possible Under SEC Law?

• Open, non-intermediated protocols could theoretically exist outside SEC purview, but real-world defi projects almost always have identifiable promoters/teams, governance tokens, or economic interests that create legal responsibility.
  • "If you have something where genuinely there’s an immaculate conception of a protocol...in a truly intermediary-less way, then yeah, I think by definition that falls outside the securities laws." (42:55)
• Most real-world DeFi (including DAOs) fail this test for true decentralization and non-intermediation.

Notable Exchange

On Uniswap Enforcement (44:53–54:57):

• Ryan & David: "Uniswap is as Defi as it gets...legitimate actors...Google for Defi." (46:24)
• Corey: “We didn’t have to work very hard to serve subpoenas to Uniswap. We can identify the people, the centralized people ... They are not some unidentifiable, ambiguous group. They are a company...They were also providing access, providing utilities to give access to that service. So you have somebody who is facilitating securities trades. They’ve built a marketplace for it, that to me falls squarely within the securities laws.” (52:27)
• Philosophical difference: If NYSE ran its exchange solely on code, would it still be responsible? For the SEC, yes.

8. Limits of the SEC

• The agency is resource-constrained—cannot audit every bit of code. Thus, requires registered structures and ex post enforcement.
  • "The SEC oversees $125 trillion securities marketplace...and it has a $2 billion budget...about 4,800 employees." (60:02)
• True “immaculate” DEFI might escape scrutiny, but has not been realized in the field.

9. On Sandboxes, Experimentation & ‘Net Good’

• Ryan presses for regulatory sandboxes for DEFI to foster innovation within law.
• Corey: Not categorically anti-crypto or anti-innovation, but firmly anti-special treatment.
  • “The technology itself may be great. The way to find out if it’s great is to have it compete on a level playing field. And if it wins that competition, the market has decided it’s great.” (68:10)

10. The Howey Test & Legal Definitions

• SEC does not say all tokens are securities per se—depends on the manner offered and sold.
  • "We were not making the case that Solana or Busd or ETH was itself a security. We're making the argument that the way it’s being offered to the public is a securities transaction..." (70:45)
• Deliberately broad definitions and nuance exist to prevent regulatory arbitrage—law must be interpreted, not rigidly codified.
  • "…the whole point of the Howey test is you, if you write down in black and white what is and is not a security, you’re writing a roadmap to getting around the securities laws." (73:05)

Notable Quotes & Moments

• "When crypto starts coming into the traditional space and doing the traditional activities, to me, it loses the protection of the argument that this is a distinct technology built for peer to peer transactions. If that's what crypto wants to build, build it. ... But if you’re going to build a bank, ... there are laws for that. Everyone has to follow the same laws." – Corey Frayer (00:00, repeated at 86:25)

• "I take issue with the way that [crypto] has become something that looks a lot more like the traditional financial system, but doesn't want to be treated like the traditional financial system." – Corey Frayer (05:42)

• "The SEC oversees $125 trillion securities marketplace...and it has a $2 billion budget...about 4,800 employees." – Corey Frayer (60:02)

• "Disclosure is really important. Fair dealing, eliminating conflicts of interest, attempting to eliminate unfair information asymmetry, insider trading, for example, going after fraud. That is the kind of investor protection that you want the SEC involved in. But absolutely not. Nothing we did was a judgment on whether or not crypto was a smart investment, a good investment." – Corey Frayer (39:34)

Timestamps for Major Segments

• Corey’s background & appointment (04:09–12:00)
• SEC’s policy logic, platform focus (17:34–21:00)
• Office Hours, accusations of “trap” (24:16–31:12)
• Foundational disagreement: startup path to decentralization (31:25–38:22)
• Investor protection philosophy (38:22–41:07)
• On DeFi & Uniswap: code as speech and exchange (44:53–54:57)
• SEC resource constraints (59:06–61:39)
• Regulatory philosophy on technology, monopolies, antitrust (66:34–68:34)
• Definition of a security, Howey test (70:45–76:53)
• Did SEC/Gensler hinder U.S. crypto innovation? (77:00–81:42)
• Good cop / Bad cop debate (83:41–86:25)
• Lightning Round policy takes: Genius Bill, SAB121, Election politics, Binance, and the future (86:51–101:23)
• Gary Gensler’s public engagement, Twitter, final remarks (104:38–111:49)

Reflections on Gensler’s SEC & Policy Future

• Corey strongly defends the SEC’s approach. He views regulation not as destructive but as foundational to trust and market growth:
  • “Regulation does not inherently harm an industry. I would argue that in fact it makes it stronger.” (81:16)
• Corey believes the 2025 SEC is deregulating core protections at great institutional risk.
• He warns the lack of rulemaking (in favor of administrative guidance) in the Atkins SEC could create whiplash for the industry and undermine trust in the institution, with future reversals sure to come if political winds change. (98:33–101:00)

Tone & Language

• Corey maintains a respectful, policy-driven, and historically informed stance—committed to market integrity, not antagonism toward technology.
• Ryan and David represent the crypto-native frustrations but repeatedly seek common ground and clarity, keeping the dialogue civil and probing.
• Regular moments of self-awareness (“I’m glad you’re not in the SEC anymore, Corey,” – Ryan, 111:34) and humor (Gary Gensler’s “deal with it” sunglasses meme) add human color to the exchange.

Final Takeaways

• The core divide remains: the crypto industry wants clear, fit-for-purpose regulation and a chance to innovate without being subsumed by 20th-century frameworks; the SEC, as voiced by Frayer, believes a level playing field is required for trust, and that regulation is the only path to growth.
• Genuine digital peer-to-peer systems may reside outside securities law, but most industry economic activity does not qualify.
• Both sides see themselves as protecting the future of finance—for Frayer, via investor trust and institutional integrity; for Bankless, via openness, optionality, and innovation.

Select Notable Quotes with Timestamps

• “There absolutely was a path [to registration], and we tried to make that path.” — Corey Frayer (31:12)
• “If you're going to show up here and be an intermediary... you have clearly entered traditional financial territory and you have to follow those rules.” — Corey Frayer (27:05)
• “If you have something where genuinely there’s this immaculate conception of a protocol that allows for trading... in a truly intermediary-less way, then yeah, I think by definition that falls outside the securities laws.” — Corey Frayer (42:55)
• “Nothing we did was a judgment on whether or not crypto was a smart investment… The way in which it was being propagated, and the way it was being traded outside of securities laws [was our concern].” — Corey Frayer (40:53)
• “A lot of people didn’t like SBF... and then it collapses and everyone goes, where was the SEC on FTX? And so you don’t know in advance who is good and who is bad.” — Corey Frayer (48:18)

Recommended Listen

For listeners new to the crypto policy debate or seeking a sophisticated, cross-aisle exchange about finance, law, and technological progress, this episode provides essential context, historical perspective, and genuine ideological engagement unmatched elsewhere in the space.