Gary Gensler: ‘Crypto Needs To Build Trust,’ Talks About 16th Anniversary of Bitcoin

Key Takeaways

• Gary Gensler, chair of the U.S. Securities Exchange Commission, has claimed that the crypto industry needs to build trust to survive long-term.
• The SEC Chair also reaffirmed that Bitcoin is not classed as a security under the agency’s guidelines.
• Gensler said the SEC is looking to build trust in investors.

Referencing Bitcoin Whitepaper’s 16th anniversary, Gary Gensler, Chair of the U.S Securities Exchange Commission , has emphasized the need for trust in the industry.

In an interview on CNBC , the Chair reaffirmed his stance that the industry needs strict rules and scrutiny if it is going to persist.

The Need for Trust

Gensler used the automobile industry as an example, claiming the innovative project would not have survived without rules and regulations.

“The automobile wouldn’t have survived if you didn’t have traffic lights, stop signs, and even cops on the road to make sure there weren’t accidents,” Gensler said.

Gensler said that the SEC, which has taken action against  several major crypto firms in the past, is looking to build trust in investors.

Gensler pointed to “leading lights” in the crypto field now being in jail as proof that the SEC’s work is needed.

“I’m not just talking about SBF, I mean, a number of others, and there’s been tens of billions of dollars of losses and bankruptcies and so forth,” he said.

“This field will not long survive if you can’t build that investor trust in the markets,” Gensler added.

Bitcoin Still Not Classified as Security

Gensler also reaffirmed that Bitcoin is not considered a security under SEC guidelines.

“You can decide to go long or short these projects, but you need the disclosures and as it relates to Bitcoin, my predecessor, and I have said, that’s not a security,” he noted.

The SEC uses the Howey Test to determine whether an asset qualifies as a security, and for something to be classified as such, there must be an investment of money in a common enterprise with an expectation of profits primarily from the efforts of others.

Since Bitcoin is more akin to a decentralized commodity like gold, with no central figure driving its value or promising returns, it has controversially fallen outside the SEC’s regulatory framework for securities.

SEC vs Crypto

The SEC continues to view cryptocurrency largely through the lens of securities law, which has long led to the agency’s clashes with the wider crypto industry.

Long-running lawsuits with major players like Ripple Labs have seen the agency accuse firms of raising funds through unregistered securities offerings.

These legal battles have caused financial strain on these firms, with Ripple Labs being ordered to pay  $125 million in August and many crypto enthusiasts and firms slamming the SEC for creating unclear guardrails.