SEC boss tells EU Parliament crypto and fintech could be as disruptive ‘as the internet’
Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), has appeared virtually before the European Parliament to share his policy recommendations regarding the regulation of crypto assets.
Speaking to the Parliament’s Committee on Economic and Monetary Affairs on Sept. 1, Gensler highlighted the role financial technologies are playing in globalizing economic flows and undermining siloed national markets:
“I think the transformation we’re living through right now could be every bit as big as the internet in the 1990s.”
Gensler highlighted the $2.1 trillion cryptocurrency markets as a “truly global” asset class, stating: “It has no borders or boundaries. It operates 24 hours a day, 7 days a week.”
While Gensler stuck largely to the same pro regulation script he’s been saying for weeks, he did diverge off into a new area when Finnish politician, Eero Heinäluoma, asked Gensler about the environmental footprint associated with crypto assets.
The politician noted the electricity consumed by the Bitcoin network was greater than The Netherlands and Sweden and exceeds “the total greenhouse gas emission reductions of electric vehicles.”
While describing Bitcoin’s environmental toll as a significant “challenge,” Gensler noted the increasing popularity of more energy efficient Proof-of-Stake (PoS) based crypto networks (which include Ethereum and Cardano) and concluded that concerns relating to the carbon emissions of crypto will become concentrated around Bitcoin as PoS adoption rises.
The SEC chairman placed emphasis on the need to develop robust public policy frameworks to balance supporting innovation in crypto assets and decentralized finance with maintaining strong investor protections.
Gensler highlighted that DeFi platforms “provide direct access to millions of investors” without the presence of a broker mediating between the public and the protocol but pointed out this came with big risks. He said that DeFi and crypto have been “rife with fraud, scams, and abuse,” and emphasized the vulnerability of the investing public in the absence of “clear investor protections obligations on these platforms.”
The SEC head also highlighted concerns pertaining to stablecoins, estimating that nearly three-quarters of crypto trading volumes involve stable token pairings.
Gensler characterized stablecoins as facilitating “those seeking to sidestep a host of public policy goals” including anti-money laundering safeguards and international sanctions.
“You’ve heard about Facebook Diem, but we already have an existing stablecoin market worth $116 billion,” he said.