Gensler calls stablecoins poker chips in a Wild West crypto casino

Chairman the SEC Gary Gensler, in an interview with Washington Post, drew analogies with the Wild West regarding consumer protection in the cryptocurrency market.

The official noted that, in many cases, there is nothing behind digital assets, that they are merely a highly speculative class of assets. He drew parallels with the Free Banking Era of 1837–1863 and questioned the survivability of most cryptocurrencies.

Gensler reiterated his belief that the overwhelming majority of them meet the status of a security, regulated by the SEC. He described as ‘comprehensive’ the powers of both the SEC and the CFTC, but pointed to gaps, notably with regard to stablecoins. He allowed that such tokens may also have ‘investment-contract’ attributes.

“Stablecoins work like poker chips in a Wild West casino. There are many warning signs. We must act proactively,” he commented.

He suggested that both regulators would benefit from Congress’s backing in regulating and enforcing stablecoins. He acknowledged that the existing laws may require clarification with regard to cryptocurrency oversight.

“Frankly, I am very concerned that we will create problems if we continue to bring these enforcement actions. Lending and trading platforms will face difficulties, affecting the interests of many of their clients,” the official warned.

He stressed that, to ensure tax compliance, combat money laundering, and protect the ‘stability of the system,’ it is important to bring cryptocurrencies within the framework of public policy.

Earlier in May, Gensler urged Congress to bring clarity to the regulatory framework for the crypto industry.

Later, the head of the Commission said that platforms offering access to tokenized shares must report to the SEC.

In August, Gensler warned of tighter regulation of stablecoins and DeFi. In his view, decentralization does not provide immunity from the Commission’s oversight.

In September, the regulator began examining the operation of DEX Uniswap and, according to media reports, several other DeFi-sector projects.

At the same time, reports emerged of the Coinbase-SEC conflict regarding the announced launch of crypto-savings accounts based on USDC at 4% per year. Recently, the bitcoin exchange refused to proceed with these plans after a regulator’s threat of a lawsuit.

Recently, a coalition of US public-interest groups called on the SEC to intensify its fight against cryptocurrencies, including regulation of stablecoins, lending platforms and Bitcoin exchanges.

Previously, stablecoins have come under close scrutiny from the Treasury Department. The agency is developing recommendations for their issuers.

Earlier, Gensler argued that regulation is necessary for the survival of cryptocurrencies.

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