Gary Gensler, chairman of the United States Securities and Exchange Commission, cautions that crypto assets will not live long independent of a public policy framework.
In an interview with The Financial Times, Gensler emphasized the importance of a regulatory framework for crypto platforms in order for them to survive.
He went on to say that crypto-assets should be subject to the same public policy imperatives as traditional assets in order to protect investors and combat illegal financial activity.
He stated that the global market capitalization of cryptocurrencies has already crossed $2 trillion, and that if cryptocurrency is “going to have any importance five or ten years from now, it will be within a public policy framework,” adding:
“History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.”
“There are a number of platforms that are in business now that would do better engaging and instead there is a little of […] begging for forgiveness rather than asking for permission,” he said, echoing his prior call for crypto trading platforms to register with the SEC.
According to Gensler, the lack of traditional brokers makes regulating crypto and decentralized finance (DeFi) platforms difficult because it’s unclear to whom the law applies in the DeFi ecosystem.
DeFi, he claimed, is a version of peer-to-peer lending firms, with governance processes, pricing models, and incentive systems that contain “a good bit of centralization”:
“It’s a misnomer to say they are just software they put out in the web. But they are not as centralized as the New York Stock Exchange. It’s sort of an interesting thing that is in between.”
Since his appointment in April, the new SEC head has emphasized the importance of strong crypto laws. Some crypto leaders, on the other hand, say that tighter restrictions will not necessarily assist to avoid fraud.
