Securities and Exchange Commission Chair Gary Gensler doesn’t view decentralization as a fact of crypto markets, despite the origins of digital currencies in circumventing centralized authorities.
“There’s a tendency for central intermediaries to benefit from scale, network effects, and access to valuable data. Though technological innovations repeatedly disrupt incumbent business models, centralization still tends to reemerge,” Gensler said in remarks prepared for a virtual appearance at the Securities Industry and Financial Markets Association’s annual meeting in New York City.
“We’ve even seen centralization in the crypto market, which was founded on the idea of decentralization,” Gensler warned. “This field actually has significant concentration among intermediaries in the middle of the market.”
Added the SEC chair: “Thus, we must remain vigilant to areas where concentration and potential economic rents have built up, or may do so in the future.”
Much of the digital asset industry has chafed at Gensler’s stance towards cryptocurrencies during his tenure as leader of the securities regulator, and he and Commodity Futures Trading Commission Chair Rostin Behnam have not always appeared to be on the same page. Though the two appear to be in agreement on an expanded role for the CFTC in regulating markets for digital commodities like bitcoin, they may not agree on what cryptocurrencies fall under that definition.
Without addressing crypto in particular, Gensler emphasized the importance of treating market participants alike, to focus “competition on price, service, and other key factors,” rather than market manipulation or “whether the game is fair.”
