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Gary Gensler called stablecoins poker chips

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Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), listens during a Financial Stability Oversight Council (FSOC) meeting at the U.S. Treasury in Washington, D.C., U.S., on Monday, Dec. 9, 2013. The FSOC discussed cybersecurity and received a presentation from the Office of Financial Research on financial market developments. Photographer: Andrew Harrer/Bloomberg via Getty Images

The U.S. Securities and Exchange Commission (SEC) chairman Gary Gensler in an interview with the Washington Post drew analogies with the Wild West. As for the situation with the protection of consumer rights in the cryptocurrency market.

The official noted that in many cases there is nothing behind digital assets. Moreover, that it is only a highly speculative asset class. He drew parallels with the “Free Banking Era” from 1837 to 1864 and questioned the “survivability” of most cryptocurrencies.

Gensler reiterated his conviction that the overwhelming number of them correspond to the status of a security that is regulated by the SEC. He described the powers of both the agency he heads and the CFTC as “full-fledged”. But he pointed out the existing “gaps”, in particular with regard to stablecoins. Gensler admitted that such tokens may also have “attributes of investment contracts”. “Stable coins work like poker chips in casinos in the Wild West. There are many warning signals. We must act ahead of the curve,” he commented.

Congressional support

Gensler hinted that both regulators would benefit from “congressional support” in relation to regulation and enforcement of stablecoins. He admitted that the current laws will require clarification in terms of supervision over cryptocurrencies.

“Frankly speaking, I am very afraid that we will create problems if we continue to initiate these enforcement cases. There will be difficulties for landing and trading platforms, which will affect the interests of many of their clients,” the official warned.

He stressed that in order to ensure compliance with tax legislation, combat money laundering, as well as to protect the “stability of the system”, it is important to include cryptocurrencies in the framework of state policy.

Clarification of the regulatory framework

Recall that in May, Gensler called on Congress to clarify the regulatory framework of the crypto industry. Later, the head of the Commission said that platforms that offer access to tokenized shares need to report to the SEC.

In August, Gensler warned of increased regulation of stablecoins and DeFi. Decentralization does not give immunity from the supervision of the Commission, in his opinion.

In September, the regulator began studying the work of DEX Uniswap and a number of other projects of the DeFi sector. At the same time, it became known about the conflict between Coinbase and the SEC over the announced launch of USDC-based crypto savings accounts at 4% per annum. Recently, the Bitcoin exchange abandoned these plans after the threat of a lawsuit from the regulator.

The fight against cryptocurrencies

Recently, a group of US public organizations called on the SEC to strengthen the fight against cryptocurrencies, including through the regulation of stablecoins, landing platforms and bitcoin exchanges.

Previously, stable coins came under the close attention of the Ministry of Finance. The Agency develops recommendations to their issuers.

Prior to this, Gensler expressed the opinion that regulation is necessary for cryptocurrencies to survive.

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