Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) has compared stablecoins to the Wild West noting the digital currencies are acting like Poker Chips at the Casino. Speaking in an interview with the Washington Post, Gensler highlighted the impact of digital currencies in pushing new frontiers for the ongoing financial revolution. However, the SEC boss says based on precedents, private forms of money are not known to last long.
“History tells us private forms of money don’t last long… These stablecoins are acting almost like poker chips at the casino right now. So, add to the Wild West analogy, I mean we have a lot of casinos here in the Wild West, and poker chips is these stablecoins at the casino gaming tables. And so I think there’s just a lot of warning signs and flashing lights that might have a spill on aisle three and I’d rather get ahead of it.”
Despite likening stablecoins as possessing elements of gambling and how speculative investments in the assets are, Gensler believes the digital currency innovation is changing the paradigm for current business models.
“I think [cryptocurrency] has been a catalyst for change… I also think it is raising new and interesting innovations around how exchanges work and how even potentially some forms of decentralized lending… challenging the established business models.”
SEC Wants Aid From Congress to Regulate Stablecoins
A part of the broad questions the SEC boss dwelt on was in the aspect of regulating the supposedly speculative marketplace. Gensler said the commission is working alongside the US Congress to regulate stablecoin, not minding the fact that the agency has robust regulatory oversight over the privately issued assets.
“I think that we have robust authorities at the Securities and Exchange Commission and we’re going to use them and continue. I think it would be better if the platforms that are trading securities, the platforms that have lending products… that they come in and we sort through, figure out how best to get them within the perimeter. We’ll also be the cop on the beat, bringing those enforcement actions as well. Working with Congress would help because there’s a lot of coordination by and amongst our financial regulators.”
The SEC noted the importance of Congress intervention as there are conflicting overlaps between the agency and other enforcement outfits like the Commodity Futures Trading Commission (CFTC).
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