Securities and Exchange Commission chairman Gary Gensler has defended his position on cryptocurrencies at the Securities Industry and Financial Markets Association’s annual meeting, addressing the need for regulation of stablecoins.
Speaking during an interview at the meeting, Gensler addressed the decisions that he and other regulators have taken when it comes to regulating the cryptocurrency industry in the US.
“There are a lot of investors reaching for yield…but these platforms right now, generally have not come into either the Commodity Futures Trading Commission or the SEC to be within an investor protection framework. And without that, you don’t have the market integrity, you don’t have the efficiency in competition or, frankly, resiliency.” Gensler stated.
Gensler also brought up the recommendations on regulating stablecoins set out by the President’s Working Group on Financial Markets on Monday. The report set out that stablecoins should be issued, insured, and regulated, by banks that are regulated by the US government. Gensler had previously alluded to the possible future regulation of stablecoins, noting in September that a stablecoin could be considered a security and therefore required regulation by the SEC.
Following the report by the Treasury on stablecoins, Gensler compared stablecoins to a teenager, noting that he believes the currency won’t reach “adulthood” without being accompanied by regulatory oversight such as money laundering regulations and tax compliance.
The government report released prior to Gensler’s comments noted:
“…a consistent and comprehensive regulatory framework is needed both to increase transparency into key aspects of stablecoin arrangements and to ensure that stablecoins function in both normal times and in stressed market conditions”.
Stablecoins have grown rapidly since their inception, with a current market capitalization by the largest stablecoin issuers exceeding $127 billion according to the Treasury report. This represents a growth of 500% compared to the preceding twelve months.
Gensler recently informed the House Committee on Financial Services that the SEC did not have any plans to ban crypto, at the time also elaborating on his thoughts on stablecoins:
“The $125 billion of stablecoins we have right now are like poker chips at a casino,” Gensler said. “I do think that if this continues to grow – and it’s grown about tenfold in the last year – it can present those systemic wide risks”.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
