“We have a lot of casinos here in the Wild West.,” Gensler spoke of the crypto market. The SEC president is once again haunting markets and investors, saying the crackdown on stablecoins will hurt.
Stablecoins are chips in a casino
Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), is stepping up his rhetoric against crypto market. He talks about the Wild West and likened stablecoins, ie tokens backed most often by fiat currency, to casino chips from old times. It is becoming more than obvious that the former professor of blockchain at MIT will not, in the position of head of the regulatory authority, take a mild, sensible and beneficial type of intervention for the crypto industry.
Gensler said for the Washington Post that most of the cryptospace projects dealt with securities that fall under the SEC’s regulatory powers. The Commodity Futures Trading Commission (CFTC) is then, in his view, more suitable for enforcing authority for other projects. The SEC chaiman called the authority of both agencies “robust,” but said there were gaps in coverage, especially for stablecoins, which “May have the attributes of investment contracts.”
“Stablecoins are just acting like poker chips in a casino,” Gensler said. “We have a lot of casinos here in the Wild West, and the poker chips are these stablecoins at the casino gaming tables.”
Is a casino chip a security?
Stablecoins do perform a similar function as tokens. They replace cash in a fiat currency such as the dollar. They can also be compared to bonus points in stores, which customers receive as a reward for the purchase, have their nominal value and can be used to pay for further purchases. After all, meal vouchers, gift vouchers and other valuables also have a very similar function – they represent cash.
Crypto exchanges and other blockchain platforms with stablecoins work as a cash substitute, and a prudent regulator protecting investors would focus primarily on how these assets are covered by real dollars and other currencies.
However, this is not the case in Gensler. Head of the SEC indicated that both the SEC and the CFTC will benefit from “Help Congress,” as regards regulation and enforcement in the field of cryptocurrencies and stablecoins. With his statements, he intimidates the crypto-industry and brings clouds to the faces of ordinary users when he says:
“I am really afraid that we will continue to file these enforcement cases, but it will be a problem. The problem will be on lending platforms, on trading platforms. Frankly, when that happens, I think a lot of people will hurt. “
We will see what concrete steps and impacts this regulatory policy will bring in the USA for the world of cryptocurrencies. The SEC has been criticized on all sides for failing to provide regulatory clarity, and the latest statements about stablecoins are just adding another twist to the fire of misunderstanding and fear. It is very unclear why Gensler also speaks of stablecoins as casino chips and at the same time claims that they are securities.