Gary Gensler, a former chairman of the US Commodity Futures Trading Commission (CFTC), has recently sat down with Bloomberg TV to talk about crypto regulation at the Institutional Crypto: Laying the Foundation conference in New York.
While some investors like Warren Buffett or Bill Gates have bashed cryptocurrencies, most agree about the huge potential of blockchain, maybe perhaps with the exception of Nouriel Roubini, who has claimed that the budding technology is “nothing more than glorified Excel spreadsheet.“ Mr. Gensler seems to agree with the former, claiming that blockchain tech, “has a real chance to be a catalyst for change in the world of finance.“
However, to be part of the future, the crypto world, “needs to come inside of public policy envelope”, which means investor protection and safeguarding against illicit activities. Gensler outlined that big crypto exchanges must work in tandem with agencies like the Securities and Exchange Commission (SEC) or CFTC in order to ensure customer safety.
Gensler, who has chaired the CFTC from 2009 to 2014, also added that, “cryptocurrencies like Bitcoin need more protection, and probably more protection than even the oil markets or corn and wheat.“ However, he has chosen to remain neutral on the regulatory scope, declining to choose which agency, SEC or CFTC, should be in charge of regulating digital currencies.
If digital assets were to be considered securities, they would fall into the regulatory realm of SEC. The two largest cryptocurrencies, bitcoin and ethereum, are considered commodities and the SEC chairman Jay Clayton even publicly stated that ether is not a security under the SEC rules. However, most other virtual currencies that came about as a result of an ICO, are likely to be scrutinized by the SEC, not CFTC.
Mr. Gensler believes that some forms of regulation is compulsory, giving the analogy that, “you want traffic lights and speed limits because then the public is confident to drive on the roads, in this case the crypto roads.”
Nonetheless, he has conceded that blockchain right now “is more hype than reality” and the technology is three to ten years from achieving the level of scalability needed for mass adoption. However Gensler is an optimist and believes that solutions for scaling issues will be developed further down the road.
The current CFTC chairman Chris Giancarlo has echoed a similar sentiment in Ripple’s Swell conference earlier this month, claiming that, “I think that cryptocurrencies are here to stay. I think that there is a future for them. I am not sure if they will ever come to rival the dollar or other hard currencies, but there is a whole section of the world that is hungry for functioning currencies.“
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I have been following the crypto markets since mid 2017, just in time to witness the incredible surge of the digital asset industry. Fascinated by the potential of blockchain technology I’ve started to dig deeper and that’s how I ended up meeting the Toshi Times team. I hold a Political Science degree, therefore the crypto regulation development is particularly interesting for me. I’m also heavily involved with music, running my own label, a YouTube channel and working with distribution. People call blockchain the ‘Fourth Industrial Revolution’ and I believe it will change our daily lives in the coming years and we will have the front row seats to witness it.