SEC Chairman Admits that Bitcoin Poses Competition to US Banking System

Speaking of other crypto projects, Gary Gensler said that these projects need to be under the regulatory realm by providing clear and straightforward information.

Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC) has recently admitted that Bitcoin serves as a strong competition to the US Banking system. These latest remarks come during the DACOM Summit 2021, earlier on Wednesday, December 1.

The SEC chairman spoke at length about Bitcoin, digital assets, decentralized finance (DeFi), and exchange-traded funds (ETFs). He stated:

“We layered over our digital money system about 40 years ago with money laundering and various sanctions and regimes around the globe; we layered that over a digital currency system called our banking system. In 2008, Satoshi Nakamoto wrote this paper in part as a reaction, an off-the-grid type of approach. It’s not surprising that there’s some competition that you and I don’t support but that’s trying to undermine that worldwide consensus.”

Furthermore, Gensler stressed the need for regulating other digital assets that have securities-like behavior. The SEC chairman said that there are many tokens created and traded worldwide outside SEC’s regulatory scope. Speaking of such projects, Gensler added:

“These have largely been about raising money for entrepreneurs, and as such, meet the time-tested definition of an investment contract and thus falls under the securities laws”.

Thus, he also asked several crypto projects to register with the SEC “and get within the investor protection remit” Gensler further added that Such projects, “whether it’s a trading platform or token,” he added, are “not going to evolve well outside of the tenets of public policy”.

Taking a Shot at DeFi

The SEC chairman said that the developments around digital assets already exist and don’t require decentralization to function. He also drew a parallel between the USD and digital currencies.

“The US dollar, the euro and the yen, and most of the public companies, are digital. You buy and sell stocks that are digital, you buy and sell treasuries that are digital; there is no physical treasury debt any longer. I tend to call these digital assets,” said Gensler.

Furthermore, he took a shot at DeFi stating that clear and straightforward information for each project should be available.

“At the core of our bargain in the securities markets is: investors get to decide what risks they want to take. But the people raising the money, the issuers, should share full and fair disclosure,” he said, adding that while the value proposition is “for the market to decide,” it must be “within public policy frameworks. “The innovations around DeFi could be real, but they won’t persist if they stay outside of the public policy frameworks,” he added.

SEC Chairman Equates Stablecoins to Poker Chips at Casino

During his address, Gensler compared stablecoins to poker chips at the Casino. He added:

“They were initially brought forward to make the trading platforms more efficient, but it also allowed people around the globe to avert money laundering and tax compliance in jurisdictions”.

To figure out how tokens should be treated, Gensler said that the SEC will be working in collaboration with the CFTC.

“We’re working together to sort through that,” Gensler added further. “But right now the public is not protected as it could be and as I believe it ought to be in this space. Technologies don’t long persist outside of public policy norms; people get hurt, trust is diminished. It’s far better to bring it inside the policy frameworks, and that’s what we’re going to try to do at the SEC.”

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.