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To thrive in the long run, SEC Chairman Gary Gensler believes crypto assets must operate inside a public policy framework.
Because “finance is about trust,” cautions Gary Gensler, chair of the United States Securities and Exchange Commission, crypto assets will not exist long in the absence of a public policy framework.
Speaking to The Financial Times, Gensler stressed the need for a regulatory framework for crypto platforms for their own survival. He explained that crypto assets should be under the same public policy imperatives to protect investors and fight illicit financial activities.
He said that the global market capitalization for cryptocurrencies has already surpassed $2 trillion and, if crypto is “going to have any relevance five and 10 years from now, it’s going to be within a public policy framework,” adding:
“History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.”
“There are a number of platforms that are in business now that would do better engaging and instead there is a little of […] begging for forgiveness rather than asking for permission,” he said, echoing his prior call for crypto trading platforms to register with the SEC.
According to Gensler, the lack of traditional brokers makes crypto and decentralised finance (DeFi) platforms difficult for regulators to regulate because it is unclear to whom the law applies in the DeFi ecosystem. He compared DeFi to peer-to-peer lending platforms, claiming that those platforms contain “a considerable level of centralisation” in terms of governance structures, pricing models, and incentive systems:
“It’s a misnomer to say they are just software they put out in the web. But they are not as centralized as the New York Stock Exchange. It’s sort of an interesting thing that is in between.”
Since his appointment in April, the new SEC chair has frequently urged for stricter rules for the cryptocurrency industry. Some crypto leaders, on the other hand, claim that tougher rules would not necessarily assist to avoid fraud.