Bitcoin (BTC) is a competitor to the banking system, says SEC chairman
As part of the Digital Asset Compliance & Market Integrity (DACOM) Summit, a series of conferences dedicated to digital assets, Gary Gensler, the head of the Securities and Exchange Commission (SEC), interacted with Jay Clayton, the former chairman of the U.S. financial regulator. The two men discussed the future of cryptocurrencies at length, Bitcoin Magazine reported this Wednesday, December 1, 2021.
During his speech, Gensler openly presented Bitcoin (BTC) as an “off-grid ” alternative to the current financial system. According to the SEC chairman, the mother of all cryptocurrencies is actively seeking to compete with the banking system. A few months earlier, former President Donald Trump actually claimed, mirroring Gensler, that Bitcoin is competing with the dollar king.
“In 2008, Satoshi Nakamoto wrote this in part as a reaction, an off-the-grid type approach. Not surprisingly, there is some competition that you and I don’t support, but that is trying to undermine that global consensus,“ Gary Gensler believes.
Afterwards, the SEC official downplayed the differences between a digital currency like Bitcoin and fiat currencies. As Gary Gensler points out, assets can be digital while being managed by a centralized entity. The decentralization at the heart of Bitcoin’s philosophy is dispensable in his eyes.
“The U.S. dollar, euro and yen, as well as most public companies, are digital. You buy and sell digital stocks, you buy and sell digital Treasuries,” the former investment banker at Goldman Sachs details.
SEC boss advocates regulation of cryptocurrencies
Mirroring his previous statements, Gary Gensler calls on cryptocurrency exchange platforms to welcome regulations with open arms and “comply with investor protection laws.” It is only through regulation that the digital asset sector will be able to evolve in a “trusted environment”, the executive argues. In September, he had already assured that exchanges will not survive without regulation.
“Investors can decide what risks they want to take. But the people who collect the money, the issuers, should share full and fair disclosure. […]The innovations around DeFi couldents are real, but they won’t persist if they remain outside of policy frameworks,“ argues Gary Gensler.
Without regulation, the cryptoasset industry remains similar to a “wild west, “ Gensler argues. It will be objected that the world of crypto-currencies is already particularly regulated by the authorities. In recent years, the legislative framework surrounding digital currencies has grown significantly, particularly in order to combat money laundering and terrorist financing. For Gensler, this is still not enough.
“The public is not protected as it could be and as I believe it should be in this sector. Technologies don’t persist for long outside of political norms; people get hurt, trust is diminished. It’s much better to build it into policy frameworks, and that’s what we’re going to try to do at the SEC,” the SEC chairman pledges.
The SEC Chairman goes on to say that insufficient regulation risks causing “financial instability”. This is also the opinion of former US Secretary of State Hilary Clinton, who recently believed that cryptocurrencies risk destabilizing nations.
Conversely, note that some regulators refute the danger of digital assets. This is for example the case of the Bank of Canada. The central bank assures that the digital currency does not represent a threat to a financial system based on fiat currencies, such as the euro or the dollar.
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About the author: Florian Bayard