NEW YORK — U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed skepticism about the widespread use of Bitcoin (BTC) and other cryptocurrencies as a form of payment during an event at New York University’s School of Law. Speaking on Wednesday, Gensler emphasized that cryptocurrencies are more likely to be viewed as stores of value rather than viable alternatives to national currencies.
When asked about the value of cryptocurrencies in a world where they are fully regulated, Gensler remained neutral. He stated, “The investing public will get to decide — through disclosures — if there’s utility for any given cryptocurrency.”
Gensler, who taught cryptocurrency at MIT, touched on the historical context, linking the discussion of monetary systems to philosophical debates from 3,000 years ago. “We tend to have one currency per geographic economic state,” Gensler explained. He referenced Gresham’s law, a monetary principle asserting that bad money drives out good money, suggesting that nations favor a single currency to maintain economic stability.
“You want one currency unit because it’s a store of value, a medium of exchange, a unit of account,” Gensler added. “So it’s unlikely this stuff is going to be a currency. It’s going to have to show its value through use, the same way you pick among thousands of securities on the stock exchange.”
Crypto’s Utility Under Scrutiny
While Gensler acknowledged the growing interest in crypto assets, he remains unconvinced about their potential as everyday currencies. Instead, he believes their true value will be proven through regulatory disclosures, making it easier for investors to evaluate their utility. “This is the investing public’s decision,” Gensler stated, emphasizing the SEC’s role as “merit neutral” in this process.
Aggressive Enforcement in the Crypto Space
During the conversation with NYU Law Professor Robert Jackson, Gensler staunchly defended the SEC’s aggressive stance against fraudulent activities in the crypto industry. “Without a cop on the beat, will all our laws be enforced?” Gensler asked. He highlighted the prevalence of fraud in the sector, noting that many leading figures in crypto were either behind bars or awaiting legal proceedings.
He pointed out that the SEC’s role is vital in curbing bad actors. “In finance, we sometimes play near the line… We need to bring enforcement actions to pull people back,” Gensler explained. He stressed that the industry is rife with scams, describing it as a haven for “a lot of fraudsters, a lot of grifters.”
No Need for New Regulatory Frameworks
Despite calls from some in the crypto community for a revamped regulatory framework, Gensler argued that the current system, including the 1940 Howey Test, provides sufficient guidance. “If anybody is wondering whether [they] might meet this time-tested test of what is an investment contract, think about it this way: Who is signing the engagement letter with your law firm? There’s a central enterprise,” Gensler said.
Gensler firmly believes that the Howey Test already covers most crypto transactions. He concluded by suggesting that many crypto assets fit the definition of investment contracts, making additional regulatory measures unnecessary.
Future Uncertainty
While Gensler declined to speculate on how the upcoming U.S. presidential election might affect the SEC, or whether he would step down if former President Donald Trump were re-elected, his remarks make one thing clear: the SEC will continue its hardline approach to regulating the crypto industry. As Gensler put it, “It belies logic” to think that crypto can operate outside of the established financial system without significant scrutiny.
With the SEC’s strict regulatory oversight and Gensler’s firm stance, the future of cryptocurrencies as mainstream currencies remains uncertain. Investors may need to look beyond the dream of Bitcoin as a global currency and focus more on its potential as a store of value.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
