Crypto is not a viable long-term form of private money and stablecoins are equivalent to poker chips at the casino, SEC chief says

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gary gensler sec chair
  • Securities and Exchange Commission Chairman Gary Gensler likened stable coins to “poker chips.”
  • Gensler returned to his previous analogy referring to the $2 trillion cryptocurrency market as the “Wild West.”
  • The SEC is working on a report about stablecoins under the guidance of Treasury Secretary Yellen.
  • See more stories on Insider’s business page.

Securities and Exchange Commission Chairman Gary Gensler likened stable coins to “poker chips,” in an interview with the Washington Post, returning to his previous analogy referring to the $2 trillion cryptocurrency market as the “Wild West.”

He also said private forms of money have turned out to be unsustainable, suggesting thousands of such projects won’t last.

Stablecoins “are acting almost like poker chips at the casino right now,” Gensler said in an interview with Washington Post columnist David Ignatius. “We’ve got a lot of casinos here in the Wild West and the poker chip is these stablecoins … at the casino gaming tables.”

Gensler in a speech in early August said the market for digital assets was like the “Wild West,” in lacking a robust amount of protection for investors. He has called on lawmakers to give the SEC more authority to regulate the industry.

A stablecoin is a cryptocurrency pegged to fiat currencies such as the US dollar and backed by traditional assets such as short-dated government bonds. Among the biggest stable coins, tether was valued at around $68 billion and USD Coin had a market capitalization of almost $30 billion, according to CoinMarketCap.com. Gensler did not name any stable coin in the interview.

The SEC is putting together a report about stable coins under the guidance of Treasury Secretary Janet Yellen, Gensler said, adding that working with Congress “would help” in the regulation of stable coins.

The interview was published after Gensler last week told the Senate banking committee that cryptocurrency exchanges need to register with the agency because some of their tokens or products may be securities.

“Those platforms should come in, they should figure out how to register, be an investment–investor protection remit,” Gensler told the Washington Post.

The regulator said there are examples of experimentation with private forms of money in the US, notably the Wildcat banking era between the 1830s to the 1860s, when banks issued their own notes and competed with each other.

“Private monies usually don’t last that long. So, I don’t think there’s a long-term viability for 5,000 or 6,000 private forms of money. History tells us otherwise,” he said. “So, in the meantime, I think it’s worthwhile to have an investor protection regime placed around this.”