U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler told Congress on Tuesday that the SEC has no plans to ban crypto.
When asked by Rep. Ted Budd (R-N.C.), a longtime crypto supporter and member of the Congressional Blockchain Caucus, if the SEC had any plans to follow China’s lead in banning cryptocurrency in favor of a prospective central bank digital currency (CBDC), Gensler said, “No, that would be up to Congress.”
Gensler’s assertion that the SEC does not plan to ban crypto mirrors similar remarks made by Federal Reserve Chair Jerome Powell last week, when the central bank head told the House Financial Services Committee that the Fed had “no plans to ban” the $2.2 trillion asset class.
Questions from Congress about the SEC’s efforts to regulate crypto come amid a growing debate on Capitol Hill about how the industry and its various parts, including exchanges and stablecoins, should be regulated.
During Tuesday’s four-hour hearing, Gensler fielded questions about cryptocurrency, stablecoins, the regulation of exchanges and decentralized finance (DeFi).
Gensler mostly reiterated his previous thoughts on crypto regulation including the need for exchanges to “come in and register” with the SEC, the potential systemic risk posed by stablecoins and the need for them to be subject to increased regulation, and that “most” cryptocurrencies fall under the definition of a security.
However, Gensler also expanded on his understanding of the SEC’s authority to regulate the crypto industry.
When asked by Rep. Jim Himes (D-Conn.) to provide “guidance” on the topic of crypto regulation, Gensler reiterated his previous position that crypto exchanges need to register with the SEC but added that decentralized exchanges (DEXs) would also be subject to regulations.
“Even in decentralized platforms – so-called DeFi platforms – there is a centralized protocol. And though they don’t take custody in the same way [as centralized exchanges], I think those are the places that we can get the maximum amount of public policy.”
Gensler also expanded on his stance on stablecoins, which he has previously called the “poker chips” at the crypto “casino.” Gensler doubled down on his poker chip analogy during his response to several questions, adding that he viewed stablecoins as a systemic risk to the economy.
“The $125 billion of stablecoins we have right now are like poker chips at a casino,” Genser said. “I do think that if this continues to grow – and it’s grown about tenfold in the last year – it can present those systemic wide risks.”
The statement comes a day after CoinDesk first reported that USDC stablecoin issuer Circle was served with an “investigative subpoena” from the SEC’s Enforcement Division in July.
The price of bitcoin, already up on the day, appeared to jump further on Gensler’s comments, rising to as high as $51,678.20. In recent trading, the price of the leading cryptocurrency was at $51,329.82, up 4.59% in the last 24 hours.
UPDATE (Oct. 5, 20:57 UTC): Adds further Gensler remarks, bitcoin price action.