SEC Chair Gensler: Stablecoins Are Poker Chips at the Casino Gaming Tables

David Ignatius of the Washington Post interviewed SEC chair, Gary Gensler, on the cryptocurrency landscape, his thoughts on his approach to regulating the crypto space.

Gensler expresses optimism for the possibilities crypto provides for enhancing finance, but also that he believes most of the space should fall under regulatory supervision – including stablecoins.

• At the start of the interview, Gensler comments on the recent market crash in the market of “crypto tokens” (the term some of his colleagues prefer, rather than ‘cryptocurrency’) calling it a “highly speculative asset class”
• Though he believes that there are innovations in the basic whitepaper Satoshi Nakamoto proposed a dozen years ago, he also says that there is “often nothing standing behind [crypto] other than what someone else will pay your for it”

• “I don’t think technologies last long outside of a social and public policy framework”, says the chairman.

• Later in the conversation, when discussing which tokens fall under the SEC’s jurisdiction, Gensler says that “most of these tokens are securities” while only “some” are commodities, and some have attributes of both.
• He then pivots to stablecoins, saying that they “may have attributes of investment contracts,” while some “have attributes like banking products…”
• Gensler also adds that the SEC is working under the guidance of secretary Janet Yellen to produce a report on stablecoins. Yellen is well known for her opposition to cryptocurrency on the grounds that they facilitate criminal activity.

Towards the end of the interview, Gensler says that he is regulating the cryptocurrency space in advance of an inevitable “spill in aisle three”. Knowing that there is no room for 5 or 6 thousand different forms of money, he is putting an investor protection regime in place before most of them fall off.

“We’ve got a lot of Casinos here in the wild west,” he comments, “ and the poker chips are these stablecoins”.