In a recent speech at New York University School of Law, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler made headlines with his assertion that cryptocurrencies like Bitcoin (BTC) are unlikely to ever become widely accepted forms of currency. While this statement may have grabbed attention, it largely reiterates what many industry participants already understand: the primary value of crypto assets lies in their utility as a store of value or an investment vehicle, not as a replacement for fiat currencies. Gensler’s comments, while perhaps technically accurate, miss the mark in addressing the real issues facing the crypto industry today.
A Misnomer: Cryptocurrencies as Currency
From the beginning, the term “cryptocurrency” has been something of a misnomer. Few, if any, in the industry still believe that digital assets like Bitcoin will serve as everyday mediums of exchange or replace government-issued money. Bitcoin may have been designed as a peer-to-peer electronic cash system, but over time, its primary use case has evolved into being a store of value—a “digital gold”—with limited transactional utility. Chairman Gensler’s assertion that crypto assets are unlikely to become currencies is more a statement of the obvious than a revelation.
Instead of focusing on this narrow point, regulators should address the more pressing questions: How should these digital assets be classified and regulated? How can we establish a framework that fosters innovation while protecting investors? And how can we ensure that the U.S. remains a global leader in this transformative space? These are the critical discussions that should be taking center stage, not a debate over whether Bitcoin can buy a cup of coffee.
Distracting from the Core Issues
Gensler’s comments seem to distract from the core regulatory issues plaguing the crypto industry. His focus on the currency debate diverts attention from the broader regulatory uncertainty that continues to stifle innovation in the U.S. While he continues to insist that most crypto assets should be treated as securities, he has not provided clear guidance on how the existing securities laws—originally designed for traditional financial instruments—should apply to an entirely new asset class.
This lack of regulatory clarity is creating confusion and, in many cases, driving innovators and entrepreneurs out of the U.S. market entirely. As I argue in my book, Regulating the Future of Finance and Money: A Rational U.S. Regulatory Approach to Maximizing the Value of Digital Assets, it’s time to move beyond piecemeal regulation-by-enforcement strategies and establish a comprehensive regulatory framework that recognizes the unique characteristics of digital assets.
The Real Focus: Innovation, Investor Protection, and Global Competitiveness
What Gensler’s comments miss is that digital assets are more than just speculative investments—they represent a paradigm shift in how value can be transferred, stored, and verified. Blockchain technology has the potential to democratize access to financial services, reduce transaction costs, and increase transparency across various sectors. However, achieving this potential requires a forward-thinking regulatory framework that balances investor protection with the need for innovation.
Regulation by enforcement, as practiced by the SEC, is not a sustainable solution. It creates uncertainty and fosters an adversarial relationship between regulators and the industry. Instead, the focus should be on proactive engagement and collaboration to establish rules that are tailored to the unique features of digital assets. Otherwise, we risk pushing innovation offshore and ceding our leadership position to other countries that are more open to embracing new technologies.
