Former SEC Chair Gary Gensler Calls Trump’s China Tariffs a “Self-Inflicted Injury” to U.S. Economy and Says Crypto Is 99% Sentiment

Former SEC Head Criticises Trump's Tariff Strategy As “Self-Inflicted Injury”

Gary Gensler, former chair of the U.S. Securities and Exchange Commission (SEC), didn’t hold back in his critique of Donald Trump’s tariff policies.

According to Gensler, these trade measures have caused significant harm to the U.S. economy, calling it a “self-inflicted injury.”

He argued that the risks related to China remained high and could further shake U.S. financial markets.

During his first public appearance with CNBC after stepping down, Gensler shared his thoughts on the ongoing trade tensions, commenting,

"I think it’s not going to end well."

While acknowledging China's strong negotiating tactics, Gensler suggested that the U.S. should handle these relations with more consistency and respect.

He added,

"The best way to handle the situation is to be consistent, to be honorable and treat them with dignity, and to take the toughest messages private and one-on-one."

Reflecting on his own experiences during the Biden administration, Gensler noted that China often sees itself in a position of strength, willing to wait out the volatility.

Gensler Warns on Altcoins and Cryptocurrency Sentiment

Gensler also offered a stark outlook on the broader cryptocurrency landscape, especially altcoins.

While acknowledging Bitcoin's unique place in the market, he warned that the majority of alternative cryptocurrencies, often driven by market sentiment, were doomed to fail.

Gensler explained,

"If you were interested in [crypto], think about how every financial asset sort of trades on a bit of fundamentals and sentiment, but this field is almost 99% – or maybe one might say 100% – sentiment and very little on fundamentals."

He made it clear that while Bitcoin had a strong, global appeal, with over 7 billion people around the world, the same could not be said for the thousands of altcoins that had flooded the market.

These tokens, Gensler argued, lacked the fundamentals needed for long-term survival.

He remarked,

"I don't think we humans will have a fascination with ten or 15,000 meme or sentiment tokens trading over the years."

Are Altcoins Just a Passing Fad?

In Gensler’s view, the speculative nature of altcoins was their biggest vulnerability.

He warned,

"Think through your own risk — your own personal risk — about where are the fundamentals, and if this is just about sentiment, then generally those don’t end up well, and most then go down."

The former SEC chair is not alone in his assessment, as many market experts agree that the speculative surge in altcoins is driven more by emotions than real value.

Bitcoin, however, has managed to maintain its stature.

Gensler compared it to precious metals like gold, saying its lasting appeal came from its global recognition.

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In contrast, altcoins were viewed as “meme or sentiment tokens” that thrived on fleeting trends but lacked lasting value.

Gensler Calls for Stronger Regulation in Crypto Markets

Gensler also weighed in on the role of regulatory oversight in the cryptocurrency space, emphasising the importance of investor protection.

He said,

"Markets work best when the public believes no one has an unfair edge."

In a market often dominated by hype and speculation, Gensler argued that proper regulation was essential to safeguard investors and ensure a fair playing field.

Will Cryptocurrency Regulation Evolve?

Turning to a different part of the financial sector, Gensler briefly touched upon the impact of artificial intelligence (AI) on trading.

While he acknowledged that AI was already reshaping the industry, he stressed that its influence in the crypto market remained secondary to the speculative nature of most tokens.

Despite his resignation in January 2025, Gensler’s comments about the risks in crypto markets, particularly altcoins, continue to resonate as investors grapple with the volatile landscape.

In his analysis, Gensler made his stance that while Bitcoin’s place in the global economy may be more secure due to its intrinsic value, many altcoins are at the mercy of market sentiment—something that rarely ensures long-term stability.