In a recent series of interviews and speeches, United States Securities and Exchange Commission chairman Gary Gensler referred to the cryptocurrency market as the “Wild West” due to its unregulated and allegedly fraudulent atmosphere and predicted that coins would be doomed to fail .
Turn on… is a monthly opinion column written by Marc Powers who, after serving with the SEC, spent much of his 40-year legal career handling complex securities cases in the United States. Today he is an adjunct professor at Florida International University College of Law, where he teaches a course on “Blockchain, Crypto and Regulatory Considerations”.
In an interview with the Washington Post published on Sept. 21, Gary Gensler stated that “private currencies” have not had longevity in history. As discussed below, I disagree with this statement. After five months as the head of this important government agency, Gensler is not only a powerful voice in the blockchain use case and regulatory debate, but also a dangerous one.
The concern of the crypto industry is that Gensler is a very intelligent and determined man as well as being ambitious. Hailing from Wharton, Goldman Sachs, he previously worked in the US Treasury Department before becoming chairman of the Commodities Futures Trading Commission (CTFC), the SEC’s sister agency. While at the CFTC, he headed what is likely the only federal agency that was established and to implement all of the requirements of the Sarbanes-Oxley Act of 2002. No wonder since his biography also includes serving as special advisor to the co-author of that law, Senator Paul Sarbanes.
I was honored to know and work with the other co-author of this historic piece of legislation, Congressman Mike Oxley, at my BakerHostler law firm. Mike ran our government affairs practice while I ran our National Securities Litigation & Regulatory Enforcement practice.
The double-edged sword
Given this broad experience inside and outside our government, Gensler knows how to get things through politically. He has also studied and taught courses on blockchain at the Massachusetts Institute of Technology (MIT) over the past few years.
SEC Chairman @GaryGensler on #Bitcoin
– Documentation of Bitcoin 📄 (@DocumentingBTC) August 3, 2021
As I have said or suggested in previous columns, that’s a double-edged sword. On the one hand, it’s good to have someone in government who understands the technology and its useful use cases. On the flip side, his intelligence can be used to find ways to serve the interests and policies of the Biden Administration, which with Federal Reserve Chairman William Powell and Treasury Secretary Janet Yellen are resolutely opposed to cryptocurrencies, the three rules and guidelines can implement this could affect the advancement and acceptance of the technology.
It only gets worse when there is Appointment of Saule Omarova to be on top Office of the Auditorbecause she has spoken out publicly against the use of digital assets. That would also be quite a reverse of the policy of her immediate predecessor, Brian Brooks. Brooks proposed rules and guidelines to the Trump administration in the last few days that would enable federal banks to house and hold digital assets for customers. Let’s see how long it takes this Hawk Omarova to handle this.
The pros and cons of introducing Bitcoin
At one level, you can’t accuse them of being against bitcoins (BTC) Introduction as an alternative digital currency or as a medium of exchange for the physical US dollar.
Its global use without government oversight or intervention scares them and over time could diminish the US dollar’s dominance as a reserve currency for the globe. You need to maintain and protect the status quo of large financial institutions and intermediaries. They are relatively long-time members of the government and they clearly believe that our government controls things.
Whenever they adopt rules and guidelines that hinder or try to regulate our activities, they always claim that it is for our own good, e.g. inflation. But we know better, don’t we?
On the other hand, for those of us who believe in the promise of distributed ledger technology, in my opinion, the good news is too late. The way BTC, Ether (ETH) and other cryptocurrencies traveling digitally from country to country worldwide is outside the regulations of any country, including the United States of America.
That’s right, let me say it again: it is too late. A country cannot kill it by banning its uses and activities, nor can a country regulate its use by global citizens to control BTC and its citizens. Bitcoin is now a world currency that neither belongs to nor is controlled by a country or currency group. It belongs to the citizens of the world.
Do you need proof of what I’m saying?
Check out China, which has banned activities in cryptocurrencies several times in the last few years, but not in possession of the token. Now it bans mining and trade again. Did that cause the downfall of BTC? No. Instead, the mining industry has relocated to Eastern Europe and the United States.
Look at South Korea, that required all crypto exchanges to register with its regulator last week. Dozens don’t have it.
Look at India, that also banned the use of BTC, up to his Supreme Court reversed this law. Today an August analysis by Chainanalysis reports that India is now in second place in the world in the introduction of cryptocurrencies.
Crypto is the inevitable
I’ve been saying since 2017 that I believe that in time we will have a dual financial system and a dual economy. There will be a crypto world economy and a parallel digital fiat currency in the form of central bank digital currencies or CBDCs that Powell is working on at the Federal Reserve and that China has already introduced to its citizens in major cities, called the digital yuan.
Accordingly, I am contradicting the history lesson of the SEC chairman when he says that private currencies are not permanent, which means the same will apply to BTC. I disagree with his characterization. I don’t see BTC as a “private” currency. On the contrary, it is a World currency, very public and accessible to anyone with a smartphone or computer. It is not created by a private or authorized blockchain, but by an unauthorized one.
While BTC is not a fiat currency created by a sovereign government, it is no less a medium of exchange for the millions of people around the world who use it daily to buy, send to relatives in other jurisdictions, and with theirs Trade price movement. Just like the daily trading of forex traders with the price development of the US dollar. If Gensler argues that BTC is not backed by anything, he may need a lesson to be reminded that the U.S. dollar has not been backed by gold since 1971.
Marc Powers is currently Associate Professor at Florida International University College of Law, where he teaches Blockchain, Crypto and Regulatory Considerations and Fintech Law. He recently retired from Am Law 100 law firm, where he built both the national practice team for securities disputes and regulatory enforcement and the hedge fund industry. Marc began his legal career in the SEC’s Enforcement Division. During his 40 years as a lawyer, he has been involved in representations including the Bernie Madoff Ponzi program, a recent presidential pardon, and the insider trading lawsuit against Martha Stewart.
Views expressed are those of the author alone and do not necessarily reflect the views of Cointelegraph or Florida International University College of Law or its affiliates. This article is for general informational purposes and is not intended as legal or investment advice.