SEC Chairman Expresses Dissatisfaction With Stablecoins, Compares Them to Poker Chips
Alicia Maher
3 min read
In a recent interview with Washington Post, SEC Chairman Gary Gensler made a cheeky metaphor comparison when he likened stablecoins to poker chips. While speaking to Columnist David Ignatius, the SEC boss reiterated that stablecoins and other cryptos pegged to fiat currencies are securities because they have the characteristics of investing contracts.
During a hearing organized by the Senate Committee on Banking last week, Senator Pat Toomey asked Gensler what he thought about stablecoins. The latter responded by saying that they could be security, adding that only a few cryptos are commodities, while a vast majority of them are securities. When asked why certain crypto regulations are unclear, Gensler replied that it was up to Congress to modify the law for better clarity. However, he repeated that the laws at the moment were clear enough regarding securities.
The Rules Gives the SEC the Upper Hand Over Cryptocurrency
Gensler stated that the laws regarding security gave the agency the upper hand over cryptos. Although he talked about cooperating with the Commodity Futures Trading Commission to intensify the clampdown, he noted that only a few tokens had the characteristics of commodities.
Gensler termed the new technologies that pose a threat to the agency and the financial sector as “a good thing”, thanking the cryptos for engineering the change the traditional financial sector and banks need. However, the head of the financial watchdog emphasized that digital assets harbor illegal activities, such as fraud, money laundering, terrorism financing, etc.
Despite his firm stance on cryptocurrency regulations, Gensler clarified that he has no negative feelings towards cryptos, but stated that protecting investors has always been the objective. He said, “we have to ensure investor and consumer protection; that’s what an agency like ours, the SEC does.”
Since the start of the year, the SEC has been scrutinizing various crypto platforms. Early this September, the watchdog filed fraud charges against BitConnect for their alleged involvement in a crypto scam worth $2B. According to the SEC, the crypto platform conned investors by purportedly organizing an enticing investment program that would guarantee high returns on investment.
In June, the commission filed a lawsuit against Ripple for trading XRP, which the SEC considers to be security. Although Ripple claimed XRP to be independent of the company’s product offerings, the SEC asserts that Ripple violated trading ethics.
The commission also threatened to sue Coinbase over its plan to launch a lending program. According to the financial regulator, Lend is security, and therefore, will not approve of its establishment.
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