SEC Chairman Sees Bitcoin As A Strong Competition to The U.S. Banking System

On Wednesday, December 1, SEC Chairman Gary Gensler spoke at length about the growing adoption of digital assets and how Bitcoin is emerging as a strong competition to the U.S. Banking system.

While speaking at the DACOM Summit 2021, Gentler said: “We layered over our digital money system about 40 years ago with money laundering and various sanctions and regimes around the globe; we layered that over a digital currency system called our banking system. In 2008, Satoshi Nakamoto wrote this paper in part as a reaction, an off-the-grid type of approach. It’s not surprising that there’s some competition that you and I don’t support but that’s trying to undermine that worldwide consensus.”

Throughout his entire conversation, the SEC chairman was trying to draw a line between Bitcoin and other digital assets. Thus, he highlighted the securities-like nature of several digital assets.

Referring to several tokens created and traded worldwide outside the SEC’s regulatory scope, Gensler said: “These have largely been about raising money for entrepreneurs, and as such, meet the time-tested definition of an investment contract and thus falls under the securities laws”.

Many a times, Genlser has referred to the entire crypto sector as “Wild West”. Besides, he also asked some existing cryptocurrency projects “find a path to register and get within the investor protection remit” He further added that such projects involving crypto exchanges must register with the SEC and are “not going to evolve well outside of the tenets of public policy”.

Just to downplay digital assets, Gensler also added that the concept of cryptocurrencies is nothing new. He noted that such projects already existed and don’t need decentralization to function.

However, maintaining a balanced stand, Gensler didn’t completely reject the right for other digital currencies to exist. “At the core of our bargain in the securities markets is: investors get to decide what risks they want to take. But the people raising the money, the issuers, should share full and fair disclosure,” he said.

Gensler further said that its is for the market to decide about the value proposition which must be within “public policy frameworks”. He further noted that if these digital assets fail to come regulatory purview of the SEC, they could contribute to financial instabilities in the future.

“We’re gonna have a ‘spill in Aisle 3’ and...it might be a financial instability event, or come from stablecoins, or by the investing public getting hurt by fraudsters or good-faith actors promoting and raising money. And the investing public didn’t, in hindsight, get enough information. The innovations around DeFi could be real, but they won’t persist if they stay outside of the public policy frameworks,” he added.