U.S. Doesn't 'Need More Digital Currency' Because It Has the Dollar, Says SEC's Gensler

Gensler's comments follow landmark suits filed this week against crypto exchanges Binance and Coinbase.

AccessTimeIconJun 6, 2023 at 2:16 p.m. UTC
Updated Jun 6, 2023 at 5:22 p.m. UTC
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The U.S. doesn’t need any more digital currency, said the Securities and Exchange Commission chief Gary Gensler, as his agency sues Binance and Coinbase for operating unregistered securities exchanges.

In an interview with CNBC on Tuesday, Gensler denied claims his approach was muddying the legal position around crypto, and also suggested there were parallels between his case against Binance Chief Executive Officer Changpeng “CZ” Zhao and the criminal case against FTX founder Sam Bankman-Fried.

“We don’t need more digital currency… we already have digital currency, it’s called the U.S. dollar,” Gensler said. “We have not seen, over the centuries, that economies and the public need more than one way to move value.”

The SEC sued Binance on Monday, and Coinbase on Tuesday, for offering services such as brokerage and clearing on allegedly regulated securities.

Gensler will seek to prove that the thousands of tokens tradeable on two of the biggest crypto venues resemble investment contracts that should have been registered with his agency, rather than mere means of payment. “All we have to show is that one of them is a security, and they should be properly registered,” he said.

“There’s been clarity for years,” about the nature of securities law, Gensler added, brushing off concerns that crypto firms have been left facing uncertain enforcement. “These intermediaries need to come into compliance.”

Gensler said that Binance affiliate Sigma Chain “boosted the volumes and corrupted the numbers because of the lack of controls,” adding that the public can “draw the parallels as you wish” with the case of Bankman-Fried, who is currently awaiting trial for charges including fraud, to which he has pleaded not guilty.

Gensler doubled down on those comments during a Bloomberg TV interview later on Tuesday.

"There's parallels here to the FTX fraud manipulation that we saw and [what the U.S. has alleged] against Sam Bankman-Fried, where he had a sister organization, Alameda, and the special arrangements with that trading platform FTX," Gensler told Bloomberg TV.

He added, "You see platform after platform [where] the entrepreneurs behind the platform[s] also are trying to build wealth for themselves and their investors, [whether] through sister organizations, hedge funds, trading against the customers or even even as it relates to...dealing against their customers."

Gensler noted that the crypto industry needed to improve its compliance and disclosure "if it's going to have any success going forward."

"Without that this whole area stands at chances of collapsing like a house of cards," Gensler said on Bloomberg TV.

The SEC's suit does not allege fraud by Zhao, but asks for civil penalties alongside a permanent ban on him acting as an officer or director of any securities issuer.

Additional reporting by Eliza Gkritsi and Sandali Handagama.

UPDATE (June 6, 16:21 UTC): Added comments from Gensler on Bloomberg TV.


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