“This Stuff is Unlikely to Become a Currency”

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler stated that it is unlikely that bitcoin (BTC) or other cryptocurrencies will become widely used as a form of payment, instead they will continue to be seen more as a store of value.

Speaking at an event held at NYU School of Law in Manhattan yesterday, Gensler responded to a question about what the value of a cryptocurrency created separately from any government would be if it were to fully comply with regulators.

Gensler said the agency is “merit neutral” and that the investing public will decide “through explanations” whether any cryptocurrency has merit.

“I’ve already taught these things at MIT and many other institutions, so I’ll just say this briefly — these discussions literally go back to Plato and Aristotle,” he said. “That’s 3,000 years of history. Hundreds of major nations, thousands of states – we tend to have a single currency per economic state. We don’t even tend to bimetallism.”

Gensler cited Gresham’s law, which dates back to the 19th century and is based on the adage that “bad money crowds out the good,” and added that nations typically want to use a single currency.

During a wide-ranging conversation with NYU Law Professor Robert Jackson, Gensler defended his agency’s record on aggressive enforcement actions against crypto companies.

“Can all laws be enforced without the police?” Gensler asked, continuing: “It’s a human nature thing. In finance, we play close to the line, and unfortunately sometimes we have to take enforcement actions to get people back to the right side of the line.”

Gensler stated that the crypto industry is full of many scammers and scams: “Since 2020, most of those who appear to be the leaders of the industry are either in prison or awaiting extradition.”

Gensler added that he sees no need for an additional regulatory framework beyond that given by the Supreme Court in 1940 (the Howey Test):

“If anyone is wondering whether they can meet this time-tested test of what an investment contract is, they can look into it… Think of it this way, who signs the commitment letter with your law firm? There is a central business, someone signs that commitment letter. Who says, ‘There is a connection with my private entity? ‘Can you make a market?’ “Knocking on the broker-dealer’s door?”

Gensler declined to comment on how the upcoming presidential election might affect the SEC or whether he would resign if former President Trump is re-elected.