Gensler said there was a trend for interdealer brokers to benefit from the scalability, network effects, and access to valuable data. He also stated he had seen centralization in the crypto market, noting that intermediaries in the middle of the market concentrate on this field significantly.
Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC), recently attacked the cryptocurrency industry by questioning its decentralized properties.
The government official spoke at the annual Securities Industry and Financial Markets Association (SIFMA) meeting. He said he did not consider the decentralization of crypto assets a factor.
He recognized that finance has tended toward centralization and concentration since ancient times. Besides, they said there was a trend for interdealer brokers to benefit from the scalability, network effects, and access to valuable data.
Gensler highlighted that only four wealth managers managed more than 80% of total net assets in US-registered index funds.
Satoshi Nakamoto created Bitcoin due to a general financial collapse caused by centralized banks and lending companies.
Gensler Does Not Believe in the Centralization of Cryptocurrencies
However, the chairman of the SEC does not consider crypto assets are decentralized, attacking the market with his centralized brush.
Gensler stated he observed centralization in the crypto market, which had emerged from decentralization. He pointed out that intermediaries in the middle of the market concentrate on this field significantly.
He referred to cryptocurrency exchanges like Coinbase, Binance, and FTX, which have become centralized giants that consume profits over the last few years.
The official wants to categorize crypto assets as stocks to regulate them under the same strict rules brokers that cryptocurrency exchanges face. That might complicate the situation for retailers, which would probably benefit institutions jumping through additional hoops.
As for intermediaries, he said there is high centralization on cryptocurrency exchanges and lending platforms. Therefore, the SEC plans to review publicly traded tokens carefully and take steps against offering unregistered securities.
The SEC Might Intend to Throw the Baby and the Bath Water
The SEC Miight want to throw the baby out with the bath water. Although leading cryptocurrency exchanges are centralized, most of the crypto assets they list are decentralized.
Gensler and the SEC can only get away with taking tight measures against cryptocurrencies by classifying decentralized assets as centralized securities.
The proposed Lummis-Gillibrand cryptocurrency bill might give the CFTC more authority to regulate the asset class. However, the regulation might not receive approval in the United States until the end of next year.
The relevance of Bitcoin and other decentralized cryptocurrencies has become increasingly evident worldwide, which the chairman of the SEC knows very well. He seeks to regulate them as stocks, which would affect retail investors to the advantage of some institutions.
Meanwhile, Bitcoin is trading at around USD 19,283 and has accumulated a 0.5% loss over the last 24 hours. While its daily trading volume is above USD 21.40 billion, its market capitalization is about USD 370.07 billion, according to CoinGecko.
By Alexander Salazar
