We Don’t Need More Digital Currency

The chair of the Securities and Exchange Commission (SEC), Gary Gensler, has never been a fan of cryptocurrency. Now he has come out and said the world does not need more digital currencies. The comments came the same day the SEC announced a lawsuit against Coinbase, the world’s second-largest exchange, and a day after unprecedented legal action against Binance and its founder.

America’s top regulator has never been one to mince words. In recent days, Gensler has lobbed possibly his most incendiary barbs at the crypto industry to date. In a week that will go down in regulatory history, Gensler’s SEC sued the two largest cryptocurrency exchanges, one day after the next. What do his latest comments portend?

We Already Have Digital Investments, Says SEC Chair

In his first big interview since the regulatory action, Gensler doubled down on his antagonistic stance toward the crypto industry. 

However, in perhaps the most notable exchange in the CNBC interview, he said: “We don’t need more digital currency. We already have digital currency. It’s called the US dollar; it’s called the euro; it’s called the yen. We have digital investments… whether it’s the big tech companies, automobile companies, it’s all digital right now, the investing world.”

Yet only a moment before declaring that the world needs no more new digital currencies, Gensler assured CNBC’s Carl Quintanilla, the show’s host, that the SEC is “merit neutral.” A comment that appears to conflict with his statements about digital currencies just seconds later.

On Monday, the SEC filed 13 charges against Binance and its founder, Chaopeng Zhao (or “CZ”), for alleged securities law violations. On Tuesday, the agency sued the crypto exchange Coinbase for reportedly acting as an unregistered broker.

These are the largest and second-largest crypto exchanges, respectively. Together they are responsible for over $11 billion dollars of trading volume in the spot market in the last 24 hours. Both deny the charges.

“Crypto should be no different… these platforms need to come into compliance,” said Gensler. “These trading platforms—they call themselves exchanges—are co-mingling a number of functions.” Speaking specifically about Binance, he added: “There really is a web of deception and conflicts, along with a control person—Mr. Zhao—trying to evade US law.”

Gensler: “We’ve Had Clarity For Years”

“We’ve tried to get from you a sense of timing, of when there would be more clarity regarding this space. It seems now’s that moment,” said Carl Quintanilla, co-anchor of CNBC’s Squawk on the Street, at the start of the interview.

“Look, I think we’ve clarity for years,” replied Gensler. For some, this a controversial statement, considering his SEC is currently embroiled in a legal case with Coinbase over a lack of regulatory clarity. 

Just yesterday, Coinbase CLO Paul Grewal revealed he would be testifying on Capitol Hill in a bid for more regulatory transparency for the industry.

Prior to the recent Binance and Coinbase cases, the legal drama was already at a fever pitch. The SEC is also embroiled in a legal battle with Ripple, the issuer of XRP. The issue: whether the token a security. The case will likely have wide-ranging implications for the digital assets market in the United States. And will provide greater clarity about what is and what isn’t a security.