SEC’s Gensler Calls Stablecoins ‘Poker Chips’ at the Wild West Crypto Casino

The SEC chair also compared the crypto boom to the Wildcat banking era of the 19th century, saying that “history tells us that private forms of money don’t last long.”

AccessTimeIconSep 22, 2021 at 9:35 p.m. UTC
Updated May 11, 2023 at 5:13 p.m. UTC

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler doubled down on his position that his agency has “robust” authority to regulate the cryptocurrency industry, stating in a conversation with the Washington Post on Tuesday that “most” cryptocurrencies have attributes of securities.

Gensler also discussed stablecoins, which have become a growing area of concern among federal regulators. Gensler told the Washington Post that the SEC is currently putting together a report about stablecoins under the guidance of Treasury Secretary Janet Yellen. He also said the SEC is working with banking regulators in order to get expanded authority from Congress to regulate stablecoins.

Gensler has previously compared the crypto industry to the Wild West, an analogy he expanded on during Tuesday’s interview. “We’ve got a lot of casinos here in the Wild West,” Gensler said. “And the poker chip is these stablecoins.”

Gensler’s comments come a week after his testimony before the Senate Banking Committee, during which he argued that crypto exchanges such as Coinbase should register with the SEC.

In his conversation with the Washington Post, Gensler expanded on his position, saying that crypto trading and lending platforms offer up to “thousands” of tokens, and it is “highly likely” that some of these tokens fit the definition of a security.

“Those platforms should come in, and they should figure out how to register,” Gensler said. “Not many have, and so I do really fear that we’ll keep bringing these enforcement cases but there’s gonna be a problem ... and, frankly, when that happens I think a lot of people are going to get hurt.”

Gensler also credited bitcoin’s pseudonymous creator, Satoshi Nakamoto – whom Gensler referred to as “Nakamoto-san” – with spurring innovation and being a catalyst for change in how central banks and the private sector handle payment systems.

Despite the benefits to innovation, however, Gensler stressed the importance of proactive crypto regulation.

“I don’t think it’s a good idea to wait until there’s a spill in aisle three,” Gensler joked. “If we don’t do anything and there’s never a spill in aisle three, great ... I think there’s just a lot of warning signs and flashing lights that we might have a spill on aisle three and I’d rather get ahead of it.”

Gensler also said several times during the interview that he doesn’t see private forms of money as viable in the long term, comparing crypto to the Wildcat banking era of the 19th century when banks in remote areas of the U.S. distributed nearly worthless paper currency backed by bonds and other securities.

“History tells us that private forms of money don’t last long,” Gensler told the Washington Post. “I don’t think there’s a long-term viability for 5,000 or 6,000 private forms of money.”


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Cheyenne Ligon

Cheyenne Ligon is a CoinDesk news reporter with a focus on crypto regulation and policy. She has no significant crypto holdings.