SEC's Gensler: Crypto Unlikely as Currency

According to reports, SEC Chairman Gary Gensler expressed doubts about the likelihood of Bitcoin (BTC) or other cryptocurrencies becoming widely accepted as a common payment method.

United States Securities and Exchange Commission (SEC) Chair Gary Gensler expressed skepticism about the prospect of Bitcoin (BTC) or other cryptocurrencies becoming a common payment method, suggesting instead that they may be more likely to be viewed as a store of value.

During an event at NYU School of Law in Manhattan on Thursday, Gensler addressed a question about the role of cryptocurrencies, which were initially designed to operate outside of government control.

However, he emphasized that their potential value to users would be shaped by how they fit into regulatory frameworks.

“Their value to users will depend on how they're useful in these regulatory frameworks,” Gensler said.

The SEC chair added that the Commission itself takes a neutral stance, leaving it up to investors to decide on the utility of any cryptocurrency through proper disclosures.

“I taught this subject at MIT, so I can say this – these discussions go back thousands of years, to philosophers like Plato and Aristotle,” Gensler said.

“And you know, throughout the history of the world's nation-states, they've generally settled on one currency for their economies, not multiple currencies or what's called bimetallism.”

Referencing Gresham's law, a 19th-century economic principle stating that 'bad money drives out the good,' Gensler highlighted that most countries prefer to have just one currency.

He explained that this is because a single currency acts as a store of value, a medium of exchange, and a unit of account, all of which benefit from network economics.

“It's unlikely for these cryptocurrencies to become mainstream currencies,” Gensler suggested.

“Their value will need to be proven through practical use and transparent disclosures — similar to how investors choose from thousands of securities on the stock exchange.”

During an extensive discussion with NYU Law Professor Robert Jackson, Gensler stood by the agency’s strong stance on enforcing regulations in the cryptocurrency space.

“Without a regulator actively overseeing, would all our laws be upheld?” Gensler asked.

“It's part of human nature, especially in finance, to push the limits. Sometimes, we have to step in with enforcement actions to steer people back within the boundaries.”

Gensler went on to criticize the crypto industry for being filled with “fraudsters, grifters, and scams,” and noted, “In 2024, many of the leading figures in this space are either behind bars or awaiting extradition.”

He also argued that there’s no need for new regulatory frameworks beyond the existing Howey Test, established by the Supreme Court in 1940, which defines what constitutes an investment contract.

“If you're wondering if your crypto project passes this well-established test, just ask yourself: Who's signing the engagement letter with your law firm?” Gensler said.

“There's always a central entity behind these operations. It defies logic to think there's no common enterprise involved.”

When asked how the upcoming presidential election might affect the SEC, or if he would remain in his role if former President Trump were re-elected, Gensler declined to comment.