Why SEC’s Gensler Remains Skeptical of Bitcoin’s Role

Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC), remains a critical voice regarding Bitcoin’s place in the financial landscape, even as the cryptocurrency continues to assert its presence globally. A central question arises from Gensler’s recent comments: Why does he maintain a skeptical stance towards Bitcoin after its widespread adoption and proof of concept? His insights, shared in a CNBC interview, provide a multifaceted view on the matter, emphasizing concerns over decentralization, the influence of centralized crypto exchanges, and the cryptocurrency’s role in illicit activities.

What You Need to Know

• Gary Gensler asserts that Bitcoin is “not that decentralized,” highlighting the significant influence of a few centralized crypto exchanges on the market.
• Gensler expresses concerns about Bitcoin’s role in illicit activities, specifically noting its prevalence in ransomware as the “token of choice.”
• He questions the comparison of Bitcoin to traditional currencies like the US dollar, euro, and yen, pointing out the lack of a comprehensive economic system and central bank support for Bitcoi

Gensler pointed out, “[Bitcoin] is not that decentralized…look at how finance tends toward centralization since antiquity. What do we have? We have a handful of three to six core so-called crypto exchanges.” With this he challenges the perception of Bitcoin as a fully decentralized entity, suggesting that the influence exerted by a few major exchanges may undermine one of Bitcoin’s fundamental claims to fame.

Moreover, Gensler’s critique extends beyond the structural aspects of Bitcoin’s market to address the types of activities it purportedly facilitates. Echoing concerns by JPMorgan CEO Jamie Dimon, Gensler remarked, “[Bitcoin] is the leading market share in ransomware, and that’s publicly known. It’s the token of choice for ransomware.” This link to criminal endeavors casts a shadow over Bitcoin, contrasting sharply with traditional currencies that, despite their own vulnerabilities to misuse, are backed by entire societies and their economic systems.

The discussion also ventured into the realm of Bitcoin’s utility and its comparison with conventional currencies. Gensler explained, “The US dollar, the euro, the yen – you have the whole [of] society using [them] as a medium of exchange…That, we don’t have here.” This lack of a comprehensive economic system supporting Bitcoin, according to Gensler, marks a “very real economic difference” between it and traditional fiat currencies, which enjoy the backing of central banks and governmental institutions.

Gensler’s skepticism also touches on the transparency and the operational mechanics of Bitcoin’s ledger. He argues that the ledger’s transparency, while innovative, does not inherently justify investment: “How many times do you have people on this show that say ‘I’m going to invest in something because of how the books and records are kept’… It’s just an accounting ledger. A clever [one].” This comment underscores Gensler’s view that the technological sophistication of Bitcoin’s blockchain does not necessarily correlate with its value as an investment.

Watch the full interview below: