in interview With David Gura on Bloomberg Markets on Wednesday, outgoing SEC Chairman Gary Gensler reviewed his tenure and the role of cryptocurrencies in US capital markets. Gensler, who has less than two weeks left in his term, has remained firm on his stance on the digital assets space, describing it as “riddled with bad actors” and asserting that “many of them will not survive.”
Cryptocurrencies are still the ‘Wild West’
Gensler began by addressing the criticisms he faced during his tenure. “It is a great honor to be in a role like this,” he said, highlighting that he is the 33rd Chairman of the SEC, and credits President Joe Biden with the appointment. He added: “You walk into this central square and discuss these matters that are important to 330 million Americans.”
When asked if the level of scrutiny he faced was different compared to his time as head of the Commodity Futures Trading Commission (CFTC) during the global financial crisis, Gensler acknowledged, “It’s changing.” However, he stressed that the Commission’s main focus remains “looking out for ordinary Americans, trying to reduce the cost of markets (…) It does not surprise me that there are some in the middle of the market who (…) may have thoughts on that and object.”
Turning to cryptocurrencies, Gensler echoed a theme he has emphasized repeatedly since taking office: the digital asset industry represents less than 1% of US capital markets — putting the entire capital market at “roughly $120 trillion” — yet it has required a significant amount of money. of investment. SEC attention.
He stuck by his previous depiction of the “Wild West” of cryptocurrencies, noting that “it is a field built around non-compliance.” He also cited enforcement actions taken during his tenure and that of his predecessor, Jay Clayton. “Jay has brought 80 enforcement actions in this area. We’ve brought about 100 in the four years we’ve been there,” Gensler said. “That’s probably about 5% of what we do in our law enforcement,” he noted, explaining that the remaining 95% Targets scammers and traditional scammers.
Highlighting how dependent and volatile the field is on emotions, Gensler divided the world of digital assets into two parts: “This field is full of bad actors. Let me split the field in two for just a minute. The public knows a lot about Bitcoin, which depends on its market value.” On any given day, it’s anywhere from two-thirds to 80% of the market capitalization of cryptocurrencies and then there’s everything else or some people say Bitcoin and Ethereum and everything else.
He was frank in his assessment that the other “10,000 or 15,000” were projects that had no fundamentals and only benefited from changes in sentiment. “I’ve never seen an industry so wrapped up in sentiment and not fundamentals. And these 10,000 to 15,000 projects, a lot of them won’t survive. They’re like venture capital investments. They won’t survive.”
Gensler also highlighted that there are a large number of “small pump and dump schemes.” Referring specifically to the high-profile enforcement actions, Gensler said: “We had a few years where they became, you know, notorious, but they’re in jail. Sam Bankman Fried, CZ and Do Kwon where investors lost tens of billions of dollars.”
Gensler was also asked about the shift from his time at MIT — where he studied digital assets — to his heavy-handed enforcement approach at the SEC. He addressed the public perception that he would be a “champion” of cryptocurrencies by pointing out the difference between academic research and regulatory responsibilities. “When you are in academia (…) you can study and observe something (…) but then when you are in this job (…) based on my predecessor (…) it is a field full of challenges and securities non-compliance “Laws.”
At press time, Bitcoin was trading at $93,253.
Featured image from YouTube, chart from TradingView.com
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