NEW YORK, N.Y. — U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler said he believes Bitcoin or other cryptocurrencies are unlikely to ever be widely used as a form of payment and will instead continue to be viewed as a store of value.
Speaking at an event at New York University School of Law in Manhattan on Wednesday, Gensler responded to a question from an attendee about what value a cryptocurrency that was created to exist separately from any government would have for its users if it were completely regulated.
Gensler said the agency is "merit neutral" and investors will be able to decide — "through disclosure" — whether there is utility in a particular cryptocurrency.
"But I taught this at MIT and so forth, so I'll just say it — this debate literally goes back to Plato and Aristotle... that's 3,000 years of history. Hundreds of great nations, thousands of nation states — we tend to have one currency per geographic economic state. We tend not to even have bimetallism."
Gensler cited Gresham's Law, a 19th-century monetary principle that "bad money drives out good," and added that countries generally want to have a single currency.
“You need one unit of currency because it’s a store of value, a medium of exchange, a unit of account. All of these things have a huge network economy,” Gensler said. “So it’s unlikely that this thing will become a currency. It’s going to have to demonstrate its value through disclosure, through use … just like you’re choosing among thousands of securities listed on a stock exchange.”
In a wide-ranging conversation with New York University law professor Robert Jackson, Gensler defended his agency's history of aggressive enforcement actions against cryptocurrency companies.
“Without a police officer on duty, will all our laws be enforced?” Gensler asked. “It’s something about human nature. In finance… we play close to the line… Sometimes we have to resort to enforcement to get people back on the right side of the line.”
He said the crypto industry was rife with "a lot of scammers, a lot of con artists, a lot of con artists," adding: "With all due respect, the leading lights in this field in 202[4] are either in jail or awaiting extradition."
Gensler added that he sees no need for additional legal framework beyond what was provided by the Supreme Court in 1940, the Howey Test.
"If anyone is wondering whether [they] can pass that time-honored test of what an investment contract is... think about it this way: Who signs the engagement letter with your law firm? There's a central entity, someone signs that engagement letter. Who knocks on the door of a broker-dealer and says, 'Can you make a market on my specific asset?' The logic is that there is no common entity at best," Gensler said.
Gensler declined to comment on how the upcoming presidential election might affect the SEC or whether he would resign if former President Trump wins re-election.