In a recent speech at New York University (NYU) Law School, SEC Chairman Gary Gensler expressed skepticism about the widespread adoption of cryptocurrencies, such as Bitcoin, as traditional currencies. Instead, he argued that they should be considered “stores of value,” similar to commodities, rather than actual currencies.
Gensler highlighted the long history of currency systems and pointed out that most economies typically rely on a single, official currency, suggesting that cryptocurrencies are unlikely to fulfill that role. He referenced Gresham’s Law, a principle stating that “bad money drives good money out of circulation,” to argue that economies usually prefer a single currency to maintain stability.
During a discussion with NYU Professor Robert Jackson, Gensler emphasized the importance of regulation in the cryptocurrency space, reiterating the SEC’s role in enforcing financial laws. He pointed to several high-profile cases of fraud in the crypto sector and stressed the need for legal actions to maintain order in the market. Gensler also reaffirmed that existing regulatory frameworks, such as the 1940 Supreme Court’s Howey Test, are sufficient for overseeing digital assets, dismissing the need for a new legal framework.
The SEC’s approach to regulating cryptocurrencies, however, has faced backlash. Commissioner Mark Uyeda, in a recent interview, called the SEC’s policy a “disaster,” criticizing the lack of clear guidelines for the industry. Crypto companies, including giants like Coinbase and Binance, have pushed back against the SEC’s efforts to classify most digital assets as securities, arguing that the current legal framework is inadequate for regulating their businesses.
#SEC commissioner admits that the agency’s handling of #crypto has caused a ‘disaster for the whole industry.’
‘We have not provided interpretive guidance,’ says SEC’s Mark #Uyeda to FOX Business | #xrp #ripple #btc pic.twitter.com/oCZOcWgaoP
— _crymet (@_crymet) October 10, 2024
The tension between the SEC and the crypto industry is expected to continue, especially as the upcoming presidential election looms. Former President Donald Trump has announced that he would fire Gensler if re-elected, raising the possibility of significant changes in the SEC’s leadership and approach to cryptocurrencies.
In a related development, the SEC has recently filed a lawsuit against Cumberland DRW LLC, accusing the market maker of mediating $2 billion in cryptocurrency transactions deemed to be securities without proper registration, signaling that the regulatory battle is far from over.
Related news: SEC Chairman Says Crypto Industry Will Die Without Investor Protection
