U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler recently shared his views on cryptocurrency during an event at NYU School of Law in Manhattan. Gensler expressed skepticism about the idea of bitcoin or other cryptocurrencies being widely used as a form of payment. Instead, he believes that they will continue to be viewed primarily as a store of value.
Gensler emphasized the importance of transparency and disclosure in the cryptocurrency space, stating that the investing public will ultimately decide the utility of any given cryptocurrency. Drawing on centuries of economic history, Gensler highlighted the preference for a single currency within geographic economic states, citing Gresham’s law as an example of the tendency for “bad money to drive out the good.”
In his discussion with NYU Law Professor Robert Jackson, Gensler defended the SEC’s enforcement actions against fraudulent activities in the crypto industry. He warned of the prevalence of fraudsters, grifters, and scams in the space, noting that many prominent figures in the field have faced legal consequences.
Gensler also addressed the regulatory framework surrounding cryptocurrencies, noting that the Howey Test established by the Supreme Court in 1940 remains relevant in determining what constitutes an investment contract. He emphasized the importance of identifying a central enterprise in cryptocurrency transactions to ensure compliance with existing regulations.
While Gensler declined to comment on the potential impact of the upcoming presidential election on the SEC, he reiterated his commitment to enforcing laws and regulations within the financial sector. As the cryptocurrency landscape continues to evolve, Gensler’s insights provide valuable perspectives on the challenges and opportunities facing this rapidly growing industry.