Gary Gensler is turning heads with comments in front of Congress and other indicators that his SEC intends to go after a wide range of cryptocurrency operators.
Much of this is based on his simple assertion that many companies with decentralized finance trading operations are offering what he calls unregistered securities.
In a post today at NewsBTC, Eduardo Prospero lays out some of Gensler’s specific comments related to a certain set of classes of digital tokens called stablecoins.
Stablecoins as a whole were designed to bridge the gulf between national fiat currencies and new cryptocurrencies, by pegging their value to the value of the dollar or some other traditional money.
Here’s how Gemini describes them, in considering the stablecoin a concession to, well, stability:
“Stablecoins offer a way to bridge the gap between fiat currencies like the U.S. dollar and cryptocurrencies. Because they are price-stable digital assets that behave somewhat like fiat but maintain the mobility and utility of cryptocurrency, stablecoins are a novel solution to crypto volatility: price stability is built directly into the assets themselves. There are four primary stablecoin types, identifiable by their underlying collateral structure: fiat-backed, crypto-backed, commodity-backed, and algorithmic.”
Gensler doesn’t appear to share this outlook, or to distinguish between the above types of stabelcoins at all. Here’s what Gensler has said about stablecoins:
“These stablecoins are acting almost like poker chips at the casino right now; so, add to the Wild West analogy. I mean, we’ve got a lot of casinos here in the Wild West and the poker chip is these stablecoins, you know, at the casino gaming tables.”
Poker analogies aside, this type of characterization seems neither transparent, nor concrete, specific, or helpful.
All of it sounds, really, a bit ominous, especially if you look at how cryptocurrency has developed to date. Some analysts believe that part of the new aggression around decentralized finance has to do with all of this regulatory machinery being somewhat asleep at the wheel during the Trump administration. Others simply believe that Gensler is a loose cannon acting on his own impulses…