If you hate cryptocurrencies, you’re one of many, but one of few, too. Crypto is a polarizing subject, and it feels even on both sides. The flaws match the benefits, there are institutions on both sides, and the yes side has meme traders on their side, which could be a benefit and a cost for them. The most important piece of approval comes from who can control you and constrain you from growing further, and in this situation it’s the SEC. Unfortunately, the SEC had a lot to say about cryptos, and it wasn’t inspiring.
On Tuesday, SEC chair Gary Gensler said that he doesn’t believe cryptos will be viable in the long term, saying that the idea of multiple currencies is nonsense. He brought up the wildcat banking era that occurred in the mid-1800s, when banks issued their own currencies, and the economy was a mess at that time until President Abraham Lincoln enforced banking regulations. The gist of the announcement was to place investor protection laws on the crypto market, something he dubbed the “Wild West”, but he specifically fired shots at stablecoins, which are crypto tokens that are pegged 1 to 1 to the dollar while being backed by high quality assets. Gensler said that stablecoins have aspects of SEC banking products, but don’t face the same regulation due to the lack of authority. Some members have compared crypto to derivatives leading up to the 2008 recession as those lacked proper investor protection and their bubble ended up bursting, although cryptos could go in a different route in my opinion. What do you think about the SEC’s comments?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.