U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed skepticism about the future of Bitcoin (BTC) and other cryptocurrencies as widely accepted forms of payment, suggesting they will remain primarily viewed as stores of value.
Speaking at an event at NYU School of Law in Manhattan on Wednesday, Gensler addressed a question regarding the utility of cryptocurrencies if fully integrated into the regulatory framework. He emphasized that the SEC operates on a “merit neutral” basis, allowing the investing public to determine the value of cryptocurrencies through proper disclosures.
Drawing on historical context, Gensler referenced philosophical debates dating back to Plato and Aristotle, stating, “These discussions have persisted for 3,000 years. Generally, we see one currency per geographic economic state.” He cited Gresham’s Law, which posits that “bad money drives out the good,” to argue that nations typically favor a single currency.
“You want one currency unit because it’s a store of value, a medium of exchange, a unit of account,” Gensler explained, underscoring the economic efficiency of networked currencies. He indicated that for cryptocurrencies to gain acceptance as currencies, they would need to demonstrate their value through disclosures and practical use, similar to the evaluation of stocks.
Addressing Fraud in the Crypto Space
In his conversation with NYU Law Professor Robert Jackson, Gensler defended the SEC’s proactive stance on enforcement actions against cryptocurrency firms. He stated, “Without a cop on the beat, will all our laws be enforced? It’s human nature to test the limits.” He remarked on the prevalence of fraud and scams within the crypto industry, adding, “The leading figures in this field in [2024] are either in jail or awaiting extradition right now.”
Gensler asserted that there is no need for additional regulatory frameworks beyond the established Howey Test, a Supreme Court ruling from 1940 that defines investment contracts. He emphasized that most crypto ventures involve a central enterprise, suggesting that the presence of a common enterprise is essential in evaluating investments.
When asked about the potential impact of the upcoming presidential election on the SEC or his position should former President Trump be re-elected, Gensler refrained from commenting.
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