- SEC Chair Gary Gensler still upholds that regulation in the “highly speculative” crypto industry is paramount.
- Ethereum co-founder and Polkadot CEO Gavin Wood agrees, saying regulation is “a good thing.”
Securities and Exchange Commission (SEC) Chair Gary Gensler, commented on regulatory action in the crypto industry on Sept. 21. Speaking in a Washington Post webinar, he explained that most cryptocurrencies are securities, and therefore, under the SEC jurisdiction. Cryptocurrency exchanges and lending platforms list thousands of tokens. Most of these are likely “securities, investment contracts, or notes, or others that fit the definition of security,” he said.
Additionally, these digital asset service platforms have the option of registering with the SEC but must opt-out.
Those platforms should come in, they should figure out how to register, but not many have.
Gensler predicts that the SEC’s enforcement cases will only increase and “a lot of people are going to get hurt.”
Gensler also likened the mushrooming of crypto tokens to the US wild-cat banking era that took place between 1836-1865. At the time, the country had no national currency, and banks were allowed to issue their currency. States readily granted banking charters and applied little oversight, if any, thus known as “the Free Banking Era.” Scams and bank closures surged, leaving people with worthless money.
Public money has a certain place around the globe, private monies usually don’t last that long, so I don’t think there’s long term viability for five or six thousand private forms of money, history tells us otherwise so in the meantime I think it’s worth it to have an investor protection regime placed around this.
Gensler on crypto regulation
Gensler, again, reiterated his support for technology and innovation. The emerging crypto sector pushed global evolution and adaption to keep up with developments, he said.
Nevertheless, the former blockchain professor feels the crypto industry is becoming too large in a negative way. Cryptocurrencies are “highly speculative” and stablecoins are “poker chips” for the $1.8 trillion market cap crypto-casino.
Before the events of the wild-cat banking era repeat, Gensler would like the SEC to step in. The commission’s oversight would improve investor and consumer protection, tax compliance, anti-money laundering, and financial stability for digital asset markets.
On a brighter side
On the same day, Gavin Wood, co-founder, and creator of Polkadot and Kusama discussed the upside of regulatory action. Regulation is ‘a a good thing’ for the crypto industry, Wood said in a CoinDesk interview during Missouri’s mainnet conference for the crypto industry.
Blockchain technology enables folks to “regain that personal sovereignty” lost in the internet age, he said. However, Wood thinks regulation will weed out projects and platforms that claim to be decentralized but are largely otherwise. Oversight would also force these projects to do away with centralized elements and become truly decentralized.
“As long as the regulations protect technologists, I think this is, broadly speaking, a good thing,” the computer scientist said.