At an event at NYU School of Law, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed skepticism about the future of Bitcoin and other cryptocurrencies as mainstream payment methods, according to a report by Cheyenne Ligon for CoinDesk. Gensler argued that it is unlikely digital currencies will ever play a significant role as forms of payment, instead remaining a store of value, similar to gold or other assets.
Gensler’s comments came in response to an audience question about how cryptocurrencies, which were created to operate outside of government control, would fit into a regulated financial system. He explained that for centuries, nations have tended to adopt one currency per economic region to ensure stability and efficiency, citing monetary principles dating back to Plato and Aristotle. Gensler referenced Gresham’s Law, a concept from the 19th century that states “bad money drives out good,” further explaining why countries are likely to stick with traditional currencies.
Despite the growing popularity of digital assets, Gensler emphasized that cryptocurrencies must prove their value through transparency and disclosure, much like traditional securities. He noted that the SEC is “merit neutral” and that it is ultimately up to the investing public to decide the utility of any given cryptocurrency.
During his discussion, Gensler defended the SEC’s tough regulatory stance, stressing the importance of enforcement actions to maintain market integrity. He warned that the crypto industry is still plagued by “a lot of fraudsters, grifters, and scams,” citing the high-profile legal cases involving prominent figures in the industry. He added that current regulations, such as the 1940s-era Howey Test, are sufficient to regulate crypto, rejecting calls for new regulatory frameworks.
Gensler avoided commenting on how the upcoming U.S. presidential election might impact the SEC’s future direction or whether he would remain in his position if former President Donald Trump were to win re-election.
On August 22, Anthony Scaramucci, founder and managing partner of SkyBridge Capital, participated in an interview on CNBC’s “Squawk Box,” where he shared his thoughts on Bitcoin and crypto in general.
Scaramucci opened by discussing the Wyoming Blockchain Symposium, noting its strategic timing and location near the Federal Reserve’s central banking conference in Jackson Hole. This juxtaposition was intentional, aiming to highlight the decentralized nature of blockchain technology in contrast to traditional central banking. The symposium attracted a significant number of high-level participants from the crypto industry, including notable figures such as Senator Cynthia Lummis, Senator Tim Scott, and former SEC Chairman Jay Clayton.
Scaramucci expressed optimism about Bitcoin’s future, particularly in the latter half of 2024. He pointed out that the “overhang of supply” seemed to be ending, which he interpreted as a positive sign for Bitcoin’s price trajectory. However, he also addressed a common debate comparing Bitcoin to gold. While gold has seen a 30% increase over the past two years, Bitcoin’s price has remained relatively stagnant. Despite this, Scaramucci reiterated his belief that Bitcoin is still in its early stages as a technology rather than a store of value. He suggested that with over a billion wallets, Bitcoin could eventually be seen as a store of value.
Scaramucci highlighted the potential of Bitcoin and other Layer 1 technologies to revolutionize payment systems and reduce transaction costs. He drew parallels to how technological advancements have previously reduced telecom costs and increased efficiencies in the economy. This, he believes, is the future trajectory for Bitcoin as it continues to integrate into the financial system.
A significant portion of the discussion centered around the impact of spot Bitcoin ETFs on the market. Scaramucci noted that the regulatory clearance for spot Bitcoin ETFs has made it safer for institutional investors to enter the market, with major firms like Morgan Stanley now allowing their financial advisors to solicit investments in Bitcoin. He mentioned that the launch of spot Bitcoin ETFs, particularly BlackRock’s, has been highly successful, marking the most successful ETF launch in history with $23 billion in assets under management.
Scaramucci acknowledged that while many in the industry expected Bitcoin’s price to reach higher levels by now, the timeline has been longer due to regulatory hurdles and market volatility. However, he remains confident that Bitcoin will eventually reach $100,000.
When discussing the current price action of Bitcoin, Scaramucci noted that approximately 65% of the inflows are going into spot Bitcoin ETFs, with the remaining 35% going directly into Bitcoin. He emphasized that the ease of buying Bitcoin through spot ETFs and storing it in brokerage accounts is contributing to this trend. He also highlighted Wall Street’s role as a “selling machine” that has yet to fully tap into the potential of Bitcoin and other digital assets.
The conversation also touched on the regulatory environment and its impact on cryptocurrency. Scaramucci mentioned that while former President Donald Trump initially criticized Bitcoin, there has been a noticeable pivot in his stance, as well as in the broader political landscape. He referenced recent comments by Senator Chuck Schumer about the possibility of passing crypto legislation by the end of 2024, suggesting that there could be growing bipartisan support for crypto regulation heading into 2025 and 2026.