Cryptocurrencies will not likely replace traditional money also called fiat according to Gary Gensler.
The chairman of the U.S. Securities and Exchange Commission (SEC), believes that people will see cryptocurrencies like bitcoin and other cryptocurrencies as mainly a way to store value but not as a replacement to fiat currencies.
In an interview session held at the New York University School of Law in Manhattan, SEC Chair Gary Gensler addressed the value of cryptocurrency.
He noted that cryptocurrencies were designed to be independent of government control. Gensler emphasized that the SEC aims to be fair and that it’s ultimately up to the public to determine a cryptocurrency’s real value based on the information available to them.
He pointed out that these debates about the value of money go back thousands of years to thinkers like Plato and Aristotle. Over history, many countries have had just one main currency, and they rarely use more than one type of money like gold and silver.
Gensler referred to an old idea called Gresham’s law, which says that when two types of money exist, the one that people think is less valuable tends to be used more, while the better one is saved or not used much.
He explained that people want one type of money because it serves multiple purposes: it helps to keep value over time, it’s used for buying and selling, and it helps to measure the value of different things. He believes that cryptocurrencies will need to prove their worth by being used and by providing clear information.
In his discussion with NYU Law Professor Robert Jackson, Gensler defended the SEC’s strong actions against crypto companies, saying that without proper enforcement, laws may not be followed. He noted that in the financial world, people often push boundaries and that enforcement actions help keep them in line.
The SEC Chairman mentioned that the cryptocurrency industry has many people who deceive others, calling them fraudsters, grifters, and scammers. He stated that the key figures in the cryptocurrency industry are right now either in jail or waiting to be sent to another country for trial.
He added that he believes the rules established by the Supreme Court in 1940, known as the Howey Test, are sufficient and there’s no need for new regulations.
The Howey test helps determine if a financial arrangement qualifies as an investment contract. Typically, a central organization is involved, similar to hiring a law firm and signing an engagement letter.
Gensler declined to comment on how the upcoming presidential election might impact the SEC or whether he would resign if former President Trump were to win again, although Trump has stated that he would fire Gensler if he eventually wins.
