SEC’s Gensler: Bitcoin Not Guaranteed

Technologies don’t long exist outside of public policy frameworks.

Gary Gensler isn’t anti-crypto; he’s technology-neutral. All he wants is to see crypto come under the fold of the established regulatory regime, where investors will be better protected. That’s the main takeaway from the SEC chair’s interview with Jen Wieczner of New York Magazine.

Gensler said that there is not necessarily any inherent conflict between the decentralization of cryptomarkets and the SEC’s mission to regulate.

“There’s a range of market structures that can work, but they work best when they’re in some regulatory perimeter,” Gensler explained.  “I happen to think a lot of economics shows that transparency works better for investors and issuers than darkness. Central clearing can lower the risks of the market and enhance competition in many cases.”

“Markets over centuries tend toward some centralization. In antiquity, you’d bring the apples or rice or grains into the central market square,” he added. “It’s where the wholesalers meet and haggle. I don’t think it’s a surprise that that’s where you get the most transparency.”

Transparency A Good Thing

The SEC chair was adamant that crypto trading platforms—including centralized ones like Coinbase and decentralized ones like Uniswap—should register with the commission.

“These platforms should come in and register with the appropriate authorities,” Gensler continued. “It’s still a highly speculative asset. It still could fluctuate quite a bit, but you’d lower the risk of fraud, lower the risk of manipulation, lower some of the tax compliance and anti-money-laundering risk.”

Ultimately, he said it’s about leveling the playing field and giving investors as much information and protection as possible. Because in his view, nothing in crypto is guaranteed—not even bitcoin.

“Somehow [the Bitcoin] network has survived 12 years. That doesn’t mean it will survive another 12. It’s uncertain. It’s a digital, scarce, speculative store of value,” Gensler warned.  “For 10,000 years, we’ve been able to invest in gold or silver—a scarce, physical store of value. But gold has various limited commercial uses. It’s beautiful as jewelry; I used to wear it as a wedding ring. Bitcoin is a digital ledger, OK—but it might not exist tomorrow.”

Gensler’s full interview with NY Magazine includes many more comments on crypto, meme stocks and SPACs. Check it out here.