The U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler, in a recent pronouncement that throws cold water to the glowing ember of the cryptocurrency industry’s ambition, casts doubts today about the potential future of digital currencies serving as viable global currencies.
Speaking at the New York University School of Law on Wednesday Gensler expressed concerns about the long-term viability of cryptocurrencies like Bitcoin serving as a means of payment or storage of value.
Gensler, who has a background in finance and economics from MIT, likened this ongoing debate to discussions dating back 3,000 years to philosophers such as Plato and Aristotle. He asserted that throughout history, it’s been rare for a nation or economic state to have more than one currency. This trend, he explained, is due to the benefits a single currency unit provides: it serves as a store of value, a medium of exchange, and a unit of account – all of which thrive under network economics.
The SEC Chairman remained neutral, emphasizing that the commission allows the public to decide, through disclosures, whether any given cryptocurrency has practical utility. However, Gensler hinted that it’s unlikely that cryptocurrencies will replace traditional currencies anytime soon. Instead, their worth would need to be demonstrated through real-world applications and transparent disclosures, similar to how investors evaluate securities listed on stock exchanges.
He also referenced Gresham’s law, a 19th-century monetary principle stating that “bad money drives out good,” noting that countries usually prefer to maintain a single currency. Gensler noted that a single currency unit is typically preferred due to its role as a store of value, a medium of exchange, and a unit of account, all of which benefit from network economics.
Gensler On Crypto Fraud, Election
Gensler also addressed the issue of fraud within the crypto industry, referring to a recent case in which authorities charged 18 individuals and entities with widespread cryptocurrency market manipulation. With prosecutors in Boston unsealing charges against leaders of four cryptocurrency firms and four market-making companies, the SEC Chair’s concerns about deceptive practices were validated.
To date, four defendants have pleaded guilty, and another has agreed to do so. Arrests were made in Texas, the UK, and Portugal this week, with authorities seizing over $25 million in cryptocurrency and shutting down multiple trading bots used for wash trades across 60 cryptocurrencies.
The SEC chairman, however, refrained from commenting on how the upcoming presidential election might affect the SEC or whether he would resign if former President Trump were to win re-election.
Gensler’s address at NYU serves as a reminder that while cryptocurrencies may hold potential, they must overcome significant challenges to prove their worth and legitimacy in the global financial landscape. The SEC remains steadfast in its mission to protect investors from fraudulent activities and ensure transparency within the crypto market.
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Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice.
The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
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