SEC Chair Gary Gensler Says Bitcoin in Competition with US Banking System

Gary Gensler, head of the U.S. Securities and Exchange Commission (SEC), has alluded to the idea that Bitcoin is in competition with the American financial system and its global consensus.

Speaking with former SEC Chairman Jay Clayton at the DACOM 2021 conference, Gensler said Satoshi’s original idea for Bitcoin has ultimately become at odds with established financial regulation.

“We layered over our digital money system about 40 years ago with money laundering and various sanctions and regimes around the globe; we layered that over a digital currency system called our banking system. In 2008, Satoshi Nakamoto wrote this paper in part as a reaction, an off-the-grid type of approach. It’s not surprising that there’s some competition that you and I don’t support but that’s trying to undermine that worldwide consensus.”

The SEC chief also highlighted his desire for more regulatory oversight over the decentralized finance (DeFi) space. Gensler predicted the occurrence of one, or perhaps many financial disasters stemming from a lack of regulation on the industry.

“We’re gonna have a spill in Aisle 3 and...it might be a financial instability event, or come from stablecoins, or by the investing public getting hurt by fraudsters or good-faith actors promoting and raising money. And the investing public didn’t, in hindsight, get enough information… The innovations around DeFi could be real, but they won’t persist if they stay outside of the public policy frameworks.”

The chairman addressed the “sprint” initiative, which is a partnership between the SEC, the Federal Deposit Insurance Corporation (FDIC), and the Commodity Futures Trade Commission (CFTC) to explore regulatory framework over digital assets.

“We’re working together to sort through that, but right now the public is not protected as it could be and as I believe it ought to be in this space. Technologies don’t long persist outside of public policy norms; people get hurt, trust is diminished. It’s far better to bring it inside the policy frameworks, and that’s what we’re going to try to do at the SEC.”

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While crypto enthusiasts were initially optimistic about Gensler taking over the SEC due to his expertise on blockchain technology, expectations of the chairman promoting the adoption of cryptocurrencies have become neutral at best. While Gensler urged crypto platforms to “get registered,” many are unclear on what he means.

​​“Get registered, come within the investor protection remit, the appropriate anti-manipulation rules and the custody issues.”