Securities and Exchange Commission Chair Gary Gensler said Tuesday he doesn't see much long-term viability of cryptocurrencies, underscoring the importance of protecting investors in the market and bringing it under regulatory oversight.
Mr. Gensler likened the thousands of cryptocurrencies in existence to the so-called Federal Banker era that lasted in the U.S. from 1837 until 1863 in the absence of wildcat banking regulation. Before President Abraham Lincoln created the office of the comptroller of the Currency, banks issued their own currency that they refused to redeem for their purported value in gold or silver.
I don't think there s long-term viability for five or six thousand private forms of money, Mr. Gensler said in a virtual event hosted by the Washington Post. Therefore in the meantime I think it s prudent to have an investor protection regime around this. Mr. Gensler, who took office in April, previously taught a class on cryptocurrency at the Massachusetts Institute of Technology, raising hopes among some industry participants that he would be a friendly regulator. Instead, he has repeatedly likened the crypto market to the Wild West and urged all exchange markets to register with the SEC, saying they are likely offering unregistered securities in violation of federal law.
He took aim at stablecoins on Tuesday, an increasing segment of the crypto market that has attracted more scrutiny from regulators in recent months. These tokens — including the Tether, USD Coin and Binance USD — are backed to the dollar in a ratio of one to one and are listed with high-quality assets. They are used mainly to trade other cryptocurrencies.
The casino game is a lot of casinos in the Wild West, and the Poker chip is these stablecoins at the table gaming poker. He said ethers often have the aspects of federal savings contracts and banking products but that SEC-regulated bank regulators don t have all the authority they need to supervise them.
In separate comments Wednesday, Acting Comptroller of the Currency Michael Hsu said that the crypto industry is on a path that closely approximates the one of credit derivatives due to the 2008 financial crisis. He expressed doubt that cryptocurrency is achieving its goal of supporting financial inclusion and criticized crypto instruments which promise steady yields to investors for failing to explain how these returns are generated.
I have seen one fool s gold rush from up close in the lead-up to the 2008 US financial crisis, Mr. Hsu said in remarks to the Blockchain Association, a cryptocurrency lobbying group. It feels like we are on the verge of a second decentralized economy with cryptocurrencies and crypto currencies.