Cryptocurrency Needs More Rules than Oil: Fmr CFTC Chair

Gary Gensler CFTC blockchain cryptocurrency

Former Commodity Futures Commission Chairman Gary Gensler, who helmed the organization from mid-2009 to early 2014, recently shared his opinions on cryptocurrency regulation in a Bloomberg interview.

Need For Regulation

Gensler was asked about the validity of blockchain technology, and the regulator-turned-blockchain-lecturer stated outright that it “has a real chance to be a catalyst for change in the world of finance.” He pointed out the fact that the decentralized nature of blockchain is significant, and noted that when he teaches blockchain technology at MIT, that “the class is crowded.”

When asked about how it should be regulated, he continued to state that if cryptocurrency truly is to be a part of the future, it must “come inside of the public policy envelope.” He stated the importance of protecting investors and guarding against illegal activity. He pointed out the fact that the large cryptocurrency exchanges have to comply with either the SEC or the CFTC, the organization that he was “once honored to chair.” He even stated that “pure cash cryptocurrencies, like bitcoin, need more protection than frankly, even the oil markets, or corn and wheat.” He then declined to comment on which organization should be regulating the market in general, declaring himself “regulator-neutral.”

Interestingly, he emphasized the importance of remaining “technology neutral” to promote innovation, while still calling for regulation — meaning that blockchain technology as a whole should not be regulated, but that there should be as much effort as possible to reduce fraud and manipulation within DLT applications.

Additional Conclusions

cryptocurrency derivatives CFTC
Source: Shutterstock

When asked whether it was realistic for organizations to understand the true nature of whether fraud is prevalent, and whether the federal government even had the manpower to regulate the industry, given the new nature of the technology, Gensler dismissed the idea that it cannot be understood, stating that, “It’s always a challenge…that was true when the internet came along in the 1990s…but I don’t think that means we give up.” He then elaborated that more confidence in markets meant that more investors could participate.

He elaborated that the more that asset managers can invest, the more widespread adoption we will see. His statements come off the heels of Fidelity, a $7.2 trillion asset manager, and a major player in global finance, announcing the creation of a new company to help its customers invest in bitcoin.

He was also clear about his belief that blockchain technology is at present still more “hype than reality.” He stated that the technology is years away from “being scaled,” comparing the transactions per second between Visa and bitcoin, and pointing out the massive difference. He does believe that the scaling issues will eventually be addressed.

Featured Image from Bloomberg/YouTube

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