U.S. Securities and Commission, or SEC, chair Gary Gensler has doubled down on his “Wild West” analogy for cryptocurrencies, calling stablecoins instruments for gambling at old-timey casinos.
Speaking to Washington Post columnist David Ignatius on Tuesday, Gensler said most projects in the crypto space dealt with securities that fall under the regulatory purview of the SEC, while the Commodity Futures Trading Commission, or CFTC, was better suited for enforcement for others. The SEC chair described the authority of both agencies as “robust” but said there were gaps in the coverage, particularly for stablecoins, which “may have attributes of investment contracts.”
“Stablecoins are almost acting like poker chips at the casino right now,” said Gensler. “We’ve got a lot of casinos here in the Wild West, and the poker chip is these stablecoins at the casino gaming tables.”
Gensler hinted that both the SEC and CFTC would benefit from “help from Congress” in regards to regulation and enforcement of stablecoins. However, according to the SEC chair, the laws currently in place are seemingly broad when it comes to handling a modern financial instrument like crypto.
“I do really fear that we’ll keep bringing these enforcement cases, but there’s going to be a problem. There’s going to be a problem on lending platforms, on trading platforms. Frankly, when that happens, I think a lot of people are going to get hurt.”
The SEC chair’s statement comes following major U.S.-based cryptocurrency exchange Coinbase announcing it would abandon its plan for a crypto lending program. The SEC previously threatened legal action against the exchange, saying it deemed the program a security.
Cointelegraph reported in August that Gensler hoped to introduce crypto-related policy changes surrounding token offerings, decentralized finance, stablecoins, custody, exchange-traded funds and lending platforms. He has long urged crypto projects to register with the SEC, specifically saying they should work with regulators to survive over the long term.