During a live webcast with The Washington Post, Gensler made the remarks. He spoke about some of the most important developments in the cryptocurrency business. On the one hand, he expressed gratitude to Satoshi Nakamoto, the Bitcoin founder and author of the whitepaper. On the other hand, he targeted thousands of additional tokens as well as the exchange platforms that trade them.
Bitcoin, according to the SEC chairman, is a “catalyst for change,” but it is also speculative and subject to price volatility. The price of Bitcoin, for example, is down 5% today and has lost more than 10% of its value in the last week.
Nonetheless, Bitcoin has compelled global central banks to investigate improving their payment systems so that they may run 24 hours a day, 7 days a week, in real-time, and at lower prices, which are intrinsic characteristics of cryptocurrencies and the blockchain.
Outside of a social and regulatory context, according to Gensler, technologies don’t stay long. As a result, he wants to include cryptocurrencies into the public policy framework in order to ensure that public policy objectives are met.
In sectors like exchanges and decentralized lending, where there is some exciting innovation that is upsetting the existing quo, Gensler admitted that central banks are competing with the private sector.
He is concerned, though, about cryptocurrency trading and lending services that allow investors to increase their profits. According to Gensler, these contracts “very likely” meet the criteria of security. He wants to see the platforms come to the Securities and Exchange Commission and figure out how to register. Few have, and he thinks that as a result, the regulator will continue to pursue enforcement actions, he explained.
There was a Spill on Aisle Three
Gensler cautioned that he doesn’t want to wait for a “spill in aisle three” in the bitcoin market, which would force the official sector to intervene. He cites the $2 trillion cryptocurrency market, which consists of thousands of projects, and claims that it would be better if they were governed by investor and consumer protection, tax compliance, anti-money laundering measures, and financial stability.
He went on to suggest that it would be ideal if regulators did nothing and there was never a leak. Private money, on the other hand, does not last long, according to history. Excess leverage is common on lending platforms outside the securities or banking perimeter, which creates a stability risk, according to Gensler.
“There are warning signs and flashing lights in aisle three that we may have a spill, and I’d like to be ahead of it.”
Collaboration with the US Congress
Gensler talked on how the SEC and the CFTC may work together on the thousands of cryptocurrencies, some of which have securities-like characteristics and others that are more related to commodities. Others have characteristics of both. He emphasised how the SEC has strong regulatory authorities that the CFTC lacks, and vice versa, which is why the two agencies should work together.
Stablecoins are digital currencies that are pegged to another asset, such as the US dollar, and Gensler outlined how the Securities and Exchange Commission might collaborate with financial regulators on them. Stablecoins, he said, “may have characteristics of investment contracts,” and banks regulators don’t have all the tools they need to govern them. Gensler claims that
“At the casino gaming tables, stablecoins operate like poker chips.”
Given that most stablecoins are tethered to the US dollar, the cryptocurrency industry found this statement amusing.