In a recent public conversation with CNBC, Gary Gensler, the chair of the US Securities and Exchange Commission (SEC), once again did what he has come to be known for; come for Bitcoin, the first and most widely used digital currency, and perhaps Gensler’s archenemy. At this point, it’s just getting tiring listening to him talk about Bitcoin.
Anyway, this time, the SEC boss boldly said that Bitcoin is hardly the beacon of decentralization it’s touted to be. Gensler has frequently positioned as a central figure in the battle against ransomware and other malware attacks, further complicating the narrative around Bitcoin’s role in the modern financial ecosystem.
What exactly does Gensler even mean?
When the CNBC interviewer floated the term “decentralization” in the midst of their dialogue, aiming to cast Bitcoin in the usual revolutionary light, Gary Gensler didn’t just disagree; he practically cut him off with a blunt, “Uh, it’s not that decentralized.” He then doubled down, steering the conversation towards a broader, perhaps more profound critique of the financial system’s gravitational pull towards centralization, a trend as old as money itself.
He elaborated, not missing a beat, “Yes, but also it’s everything. Look how finance tends towards centralization since antiquity.” His argument? That the cryptocurrency ecosystem, despite its high-minded ideals of decentralization, isn’t all that different. With only a select few entities really understanding or controlling the majority of the so-called decentralized assets, Gensler threw a bucket of cold water on the fiery idealism surrounding Bitcoin’s revolutionary ledger technology. He reduced it to what it fundamentally is—an accounting ledger, albeit a clever one. “It’s a Ledger that everyone has,” he said, but with a tone that suggested he found the widespread fascination with this aspect a bit overblown.
The paradox amid criticism
Since becoming chair of the SEC, Gensler has taken a position that is, in terms of cryptocurrency regulation, best characterized as enforcement-heavy. His tenure has been defined by a steadfast dedication to drawing attention to the risks associated with digital assets, both in terms of their intrinsic volatility and their potential use in illegal operations.
Regardless, he seemed to be at odds with his often critical stance on the asset class when, earlier this year, the SEC, acting under his supervision, approved eleven Spot Bitcoin ETFs. On the other hand, there were certain conditions attached to this decision. Our boy made sure to mention that the assets involved remained the same, comparing it to applications that were turned down before but also noting how things changed for the better.
How the SEC managed to approve so many Spot Bitcoin ETFs in the face of such strong opposition is a mystery. The agency’s complex approach to cryptocurrency regulation holds the key to the solution. Even though Gensler has been quite forthright about Bitcoin’s speculative and volatile nature—calling it a breeding ground for ransomware, money laundering, sanction evasion, and even terrorist financing—the SEC has nevertheless acknowledged the increasing interest from institutions and the possibility of regulated investment products in the space. This duality highlights the complicated regulatory environment where innovation and risk abound, necessitating a middle ground that does not hinder development while ignoring the possibility of abuse.
