The chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, has appeared electronically before the European Parliament to discuss his policy views on crypto asset regulation.
On September 1, Gensler spoke to the Parliament’s Economic and Monetary Affairs Committee, emphasising the role financial technology play in globalising economic flows and undermining walled national markets:
“I believe the current transformation will be as bit as significant as the internet was in the 1990s.”
The $2.1 trillion cryptocurrency markets, according to Gensler, are a “truly global” asset class with “no borders or limits.” It’s open seven days a week, 24 hours a day.”
While Gensler mainly adhered to the same pro-regulation script he’d been preaching for weeks, he did stray into new territory when Finnish lawmaker Eero Heinäluoma inquired about the environmental impact of crypto assets.
The Bitcoin network consumes more electricity than the Netherlands and Sweden combined, and it exceeds “the overall greenhouse gas emission reductions of electric automobiles,” according to the politician.
While describing Bitcoin’s environmental impact as a “significant challenge,” Gensler pointed to the growing popularity of more energy-efficient Proof-of-Stake (PoS) based crypto networks (such as Ethereum and Cardano) and concluded that as PoS adoption grows, concerns about crypto’s carbon emissions will focus on Bitcoin.
The head of the Securities and Exchange Commission emphasised the importance of developing strong public policy frameworks that balance promoting crypto assets and decentralised finance innovation while ensuring solid investor safeguards.
DeFi platforms, according to Gensler, “provide direct access to millions of investors” without the need for a broker to act as a middleman between the public and the protocol, but this comes with significant risks. He claimed that DeFi and crypto have been “rife with fraud, frauds, and abuse,” and that the investing public is vulnerable due to the lack of “clear investor protections responsibilities on these platforms.”
Related: SEC Chair cautions that cryptocurrency is too big to thrive outside of government rules
The SEC chairman also raised worries about stablecoins, claiming that stable token pairings account for approximately three-quarters of all crypto trading volumes.
Stablecoins, according to Gensler, help “those wanting to avoid a plethora of public policy aims,” such as anti-money laundering protections and international penalties.
“You may have heard of Facebook Diem, but we already have a $116 billion stablecoin market,” he remarked.