Crypto Is the ‘Wild West,’ Gensler Tells US Army

“Most of these 10 or 15,000 tokens will fail,” Gensler said in a Wednesday Twitter spaces collaboration between the SEC and the Army

article-image

SEC Chair Gary Gensler | Source: Third Way "Gary Gensler" (CC license)

share

The latest audience to Gary Gensler’s long running crypto skepticism? The US Army. 

When it comes to speculative assets — which include digital ones, in the newest iteration of the SEC chair’s crypto critiques — Gensler remains skeptical as ever, he said during a Twitter spaces hosted by the Army on Wednesday.

In a session branded as financial advice for US service members, Gensler said most cryptocurrencies lack proper regulatory compliance and use cases. The crypto industry is the “Wild West,” per Gensler, adding, once again, that it’s easy to get caught up in “FOMO” swirling around the sector. Or at least the fear of missing out that was prevalent before the bear market.

Traders and companies should proceed with caution, Gensler said during the spaces, as most currencies are not currently abiding by the law. 

“Most of these, again, are not complying with the securities laws, but they should be,” Gensler said.

Gensler doubled down on many of his previous comments on Wednesday, saying that the value proposition for digital assets is just not there. 

“Most of these 10 or 15,000 tokens will fail,” Gensler said. “That’s because venture capital fails, new startups fail —  but also because history tells us that there’s not much room for micro currencies, meaning, you know, we have the US dollar and Europe has the euro and the like.” 

The sentiment highlights one key area of concern for Gensler and the SEC more broadly: how crypto tokens are classified. If cryptocurrencies are securities, they would fall under the SEC’s purview. 

Gensler’s office has issued a series of enforcement actions — most recently declaring FTX’s native FTT exchange token a security. They’ve escalated in recent months.

“The classification of FTT as a security is no surprise as it is in line with the LBRY action and the Ripple action,” Abiel Garcia, partner at Kesselman, Brantly & Stockinger LLP, told Blockworks last month. “It is clear that the SEC now believes crypto tokens can fall within the securities definition and plans to enforce that concept in full force.”

The SEC head has also placed crypto intermediaries on notice, suggesting that they need to register with the agency during his testimony before the US Senate Committee on Banking, Housing, and Urban Affairs in September. 

“Given that most crypto tokens are securities, it follows that many crypto intermediaries — whether they call themselves centralized or decentralized — are transacting in securities and have to register with the SEC in some capacity,” Gensler said during the September hearing.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Screenshot 2024-05-23 091855.png

Research

Bitcoin L2s aim to boost scalability while preserving decentralization and security, unlocking a better user experience, and new avenues for Bitcoin-powered innovations. However, no existing Bitcoin L2 leverages the full security of Bitcoin.

article-image

Sponsored

The convergence of AI and blockchain on Polkadot represents a groundbreaking opportunity for investors and developers alike

article-image

The company is making public a previously private offer rejected by Bitfarms’ board of directors last month

article-image

Semler Scientific, a publicly traded medical tech company, joined MicroStrategy by buying up millions of bitcoin

article-image

As someone who’s been knee-deep in the trenches of blockchain development, I can’t help but wonder if these behemoths are really cutting it anymore

article-image

UNI and MKR are suffering from the successes of their respective protocols

article-image

Maybe there’s no silver bullet to avoiding most tokens dumping after launch…