Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), reiterated his critical stance on cryptocurrencies. Speaking at an event at the New York University School of Law, he stated that it is unlikely that digital currencies like Bitcoin will be accepted as mainstream payment methods in the near future.
Gensler’s skeptical stance on cryptocurrencies
At an event at the New York University School of Law, SEC Chairman Gary Gensler underscored his doubts about the widespread adoption of cryptocurrencies as currency, as reported by Markets Insider. He expressed that it is “unlikely” for digital assets like Bitcoin to gain mainstream acceptance as a form of payment. Gensler emphasized that the value of such digital assets should not be derived from their use as payment tools but rather from transparency and practical utility.
Drawing on historical and economic principles like Gresham’s Law—which suggests that “bad money drives out good”—Gensler argued that nations tend to favor a stable, centralized currency over alternatives. This view aligns with his belief that digital assets face significant hurdles in becoming widely accepted monetary units.
Regulation and security: The need for transparency
According to SEC Chairman Gary Gensler, cryptocurrencies are currently highly susceptible to fraud, necessitating regulatory action to protect the public from these risks. Gensler noted that crypto-related losses due to fraud and crime have surged by 45% since 2022, as reported by Cryptopolitan. He emphasized that the crypto sector has “many dark corners where fraudsters and scammers operate,” pointing to prominent figures like FTX founder Sam Bankman-Fried and Terra founder Do Kwon, both currently facing legal consequences. These examples, Gensler argues, demonstrate how pervasive fraud is in the industry.
Gensler believes that existing securities laws should be extended to crypto to ensure investor protection and uphold market integrity, a view supported by Markets Insider.
No Need for New Laws?
Gensler highlighted that additional regulatory frameworks may not be necessary, as existing laws are sufficient to address core market aspects. The Howey Test, initially developed to define securities, remains applicable to many cryptocurrencies in today’s market. Gensler criticized certain crypto projects that use terms like “decentralization” or “DAO” (Decentralized Autonomous Organizations) to evade legal obligations, calling this a misinterpretation of current law.
Gensler’s View on the future of cryptocurrencies
In closing, Gensler noted that while cryptocurrencies represent innovative technology, they must operate strictly within the existing legal and regulatory frameworks. He doubted their ability to replace traditional currencies unless they prove value through transparency and genuine utility. According to Cryptopolitan, Gensler stressed that “just because people don’t like the law doesn’t mean there is no law,” underscoring his commitment to enforcing current regulations. While cryptocurrencies may continue as speculative assets, they must adhere to regulatory guidelines to ensure their survival in the long term.
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