In a recent talk at the New York University (NYU) School of Law, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed doubts about the future of bitcoin (BTC) and other cryptocurrencies as common payment methods. Instead, he believes these digital assets will continue to serve more as a store of value rather than being widely adopted for everyday transactions.
Gensler’s remarks were made in response to a question from an audience member who asked about the relevance of cryptocurrencies if they become fully regulated. Cryptocurrencies were initially created to operate outside the reach of governments, so the question raised concerns about how they would still be useful under regulatory frameworks.
Cryptocurrencies Unlikely to Become Mainstream Payment Methods
Gensler emphasized that the SEC remains “merit neutral” and that it’s up to investors to determine the value of cryptocurrencies through disclosure. He pointed out that this is part of a broader historical debate on the role of currency that stretches back thousands of years. Drawing on his academic background as a former MIT professor, Gensler mentioned that discussions around currency and value date back to philosophers like Plato and Aristotle. He highlighted that historically, nations tend to use one currency for their economic stability, and that it’s rare to have multiple forms of money circulating within the same economy.
He referenced Gresham’s law, an old economic principle which suggests that “bad money drives out the good.” This principle, according to Gensler, supports the idea that countries generally favor having one reliable currency rather than multiple competing ones. Given these factors, Gensler suggested it’s unlikely that cryptocurrencies will replace traditional currencies. Instead, their value will likely come from other uses, determined through regulatory disclosures and practical applications.
SEC’s Strong Stance on Crypto Regulation and Enforcement
In his discussion with NYU Law Professor Robert Jackson, Gensler also defended the SEC’s tough regulatory actions against the cryptocurrency industry. He made it clear that without regulatory enforcement, laws would be difficult to uphold. He argued that, especially in finance, people often push the boundaries, which necessitates action from regulators to ensure compliance.
Gensler further highlighted the presence of fraud and scams in the crypto space, pointing out that many high-profile individuals in the industry have either been convicted or are awaiting trial. This, he said, shows the need for strong oversight.
When discussing regulations, Gensler stated that the current legal framework is sufficient. He pointed to the Howey Test, established by the Supreme Court in 1940, which helps define what qualifies as an investment contract. Gensler emphasized that this test is still relevant and should continue to guide the regulatory approach toward cryptocurrencies.
Overall, Gensler remains skeptical about the widespread use of cryptocurrencies as everyday money, seeing them as financial assets that will need to prove their value through transparency and responsible use.