The Chairman of the United States Securities and Exchange Commission (SEC) believes cryptocurrencies will not live long.
SEC Chairman Gary Gensler compared cryptocurrencies to previous financial movements during a virtual event presented by the Washington Post. He compared the thousands of digital currencies to the so-called wildcat banking era in the United States from 1837 and 1963. There was no federal bank regulation throughout this period of history, and banks occasionally produced their own currencies.
Gensler stated that due to the diversity of currencies, he does not believe cryptocurrencies will be sustainable in the long run. Additionally, he emphasized the critical nature of investor protection and regulatory monitoring.
“I don’t believe that five or six thousand private kinds of money have a long-term viability,” Gensler stated. “In the interim, I believe it is worthwhile to enshrine an investor protection regime around this.”
Additionally, Acting Comptroller of the Currency Michael Hsu compared the crypto business to pre-2008 credit derivatives. “I witnessed one fool’s gold rush up close in the run-up to the 2008 financial crisis,” Hsu told the Blockchain Association advocacy organization. “With cryptocurrencies and decentralized finance, it appears as though we are on the verge of another.”
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The crypto sector had high aspirations for the SEC before to Gensler’s appointment as Chairman. Gensler previously worked as a blockchain professor at MIT. Many believed his knowledge and insight into the crypto space’s technological underpinnings would be a beneficial development.
However, since the start of his tenure at the SEC, Gensler’s position against the business has shifted more antagonistic. Gensler’s words in August hinted at his desire for a more comprehensive crypto monitoring framework.
Shortly thereafter, the SEC Chairman solicited regulatory support from Senator Elizabeth Warren. Warren’s view on cryptocurrencies is decidedly anti-industry. Prior to Gensler’s request, the Senator advocated for increased oversight of cryptocurrencies.
Earlier this month, Gensler stated that crypto platforms required government regulation to ensure their long-term viability. Shortly thereafter, he presented a regulatory road plan geared toward the industry.
Meanwhile, the SEC has a number of lawsuits and possible investigations pending against crypto-related companies. The most well-known is the continuing Ripple case, in which the corporation maintains its innocence. However, the SEC has begun an investigation into UniSwap, the world’s largest decentralized exchange, and issued a lawsuit threat against Coinbase.
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