Gary Gensler concerned with decentralization of Bitcoin and illicit use, consumer protection coming for DeFi, ICOs, and altcoins

(Last Updated on August 15, 2021)

Watch Gary speak live today on YouTube

It’s more like the WILD WEST!

Gary Gensler @ 8.3.21 at the Aspen Security Forum

Right off the bat the new SEC head makes it abundantly clear that they will be enforcing future regulations to protect investors and consumers of crypto assets. They are going to target security fraud, ICOs, and the most fraudulent tokens first.

The SEC has a major fear of “true decentralization” in the digital asset space.

They want to regulate and continue to keep fiat currency based regimes in control of national economies around the world. The central bank digital currencies will be the focus and Bitcoin will be thought of as a speculative asset class that fails to meet the 3 pillars of functioning money.

Gary explains that Bitcoin fails to be used as a medium-of-exchange.

He basically starts with some celebration that Bitcoin is a true unique innovation and blockchain technology will help innovate the financial space. That it may be the catalyst for growth and evolution in the finance world … but.. right now it is “being used for bad”.

Money laundering, used to skirt sanctions, demanded as ransomware for massive hacks, blah blah…

Like we didn’t see this coming?

Currently most estimates put illicit activity in BITCOIN at LESS than 2.5%.

We know the U.S. Dollar has facilitated A LOT more illicit and criminal activity than any other medium of exchange to ever exist.. and it’s still pumping through the banks today.

The courts and U.S. regulators should well know that the major U.S banks pay billions in fines (every year) for illicit financial activities while earning many billions more through those scummy connections.

We don’t need your BS reasons for more financial surveillance and privacy attacks on the individual.

Can we please focus on fixing the current U.S. financial system that benefits corrupt institutions and lobbying corporations that accrue all the wealth to the 1% while destroying our environment, small businesses, and every individual freedom in our country?

I agree – get rid of the scams, ICOs, and sh*tcoins that have plagued and copied Bitcoin for over a decade. Get rid of the scammy lenders and ponzi scheme junk offerings that flagrantly attack the newbie “crypto trader” and suck away any worth they can.

We don’t need all the accessory junk that exists in “crypto”.

But all humans on this planet need Bitcoin more than ever.

Financial sovereignty for all.

“The Crypto Asset class is full of fraud, scam, and abuses in certain applications…”

Right now, though, in this digital scarce speculation asset, Bitcoin and others, we just don’t have enough investor protection and frankly, at this time, it’s more like the wild west, than some sort of protection against fraud, manipulation in this space.

This asset class is rife with fraud, scam, and abuses in certain applications.

There’s a great deal of hype and spin about how crypto assets work and in many cases investors aren’t able to get rigorous balanced complete information. It doesn’t mean there aren’t good faith actors and there are many of them. But investors really aren’t getting the information to judge the risk and understand the risk. And I fear that if we don’t address the issues a lot of people will be hurt.

Believes Bitcoin’s primary usage for “medium of exchange” has been only to launder money, skirt financial regulations, and empower criminal entities..

And we also haven’t seen that crypto has been used much as a medium of exchange.

Except for one large exception – to the extent is that it is being used as a medium of exchange to skirt our laws in respect to anti-money laundering, sanctions, tax collection, on the dark web, and yes it’s also enabled extortion via ransomware as we’ve seen recently in Colonial Pipeline and elsewhere.

You see with the advent of the internet 40 years ago and the movement from physical paper money to digital money. We nation states around the globe layered various public policy goals over our digital public money systems. Sanction regimes, anti-money laundering, tax compliance, we did that sort of in this digital public money area. And that’s to what some extent people are using a medium exchange in crypto.

Recent 2020 research on the percentage % of illicit and criminal activity in the crypto market.

It is less than 2.5%!

What the f*^k are you talking about Gary?


Gary is pushing “crypto is a threat to national security” while the data points otherwise..

There has been a ton of media coverage on criminal and “illicit activity” in crypto this past year.

He is just putting out the same old “crypto is used by money launderers, terrorists, and drug cartel” FUD that has been dispelled for years..

Here are some of the latest platforms to dispel this old FUD in 2021.

Bitcoin illicit use statistics from Cipher Trace and The Cipher Brief

Here is Gary’s opening Statement on Bitcoin and he touches on how his past teachings at MIT have influenced his thinking process on the crypto asset space.

I would love to be able to sit-down and respond for Gary to please separate Bitcoin from sh*tcoins.

But let’s go through what he says..

Gary opens with a shoutout to “cypher punks” but clearly does not support their privacy and decentralization goals for the individual..

[Gary Gensler begins his video presentation]

What does the SEC have to do with Crypto?

Many of you might not know, but it was Halloween night in 2008 when Satoshi Nakamoto published an 8 page paper on a cypher punk mailing list. I don’t mispronounce it, a cypher punk mailing list. It had been around and ran by cryptographers since 1992. A little off the grid, a little libertarian, cypher punk mailing list.

Now Nakamoto, and we still don’t know who he/she/or they were.

He wrote, “I’ve been working on a new electronic cash system that’s fully peer to peer with no trusted 3rd party. “

You see, at the core, Nakamoto is talking about some form of private money that didn’t have central intermediaries. But Nakamoto had solved two riddles that had dogged these cryptographers and other technology experts for a couple of decades since the dawn of the internet.

First, was how to move something of value on the internet without a central intermediary. and that’s where it can fit into national security.

And relatedly, how to prevent double spending of that valuable digital token.

So subsequently, her innovation, or his, spurred the development of crypto asset and the underlying blockchain technology.

About a dozen years later where are we?

The crypto asset class has ballooned!

As of yesterday about 1.6 trillion dollars worth of value.

Of course it goes up and goes down, over 75 tokens worth a billion dollars each, 1600 tokens worth at least a million dollars each of market capitalization. and that 1.6 trillion is relatively small compared to the U.S. capital markets of nearly 100 trillion dollars. Its still significant and of course larger than the capital markets of many jurisdictions that this security forum would discuss.

Before starting at the SEC I was honored teaching about the intersect of finance and technology at MIT. This included courses in these various topics and in that work I came to believe that though there was a lot of hype masquerading as reality in the crypto field. Nakamoto’s innovation is real, and some in the public sector would say, “well no.” almost as if wishing it away.

I really do think – there is something real about the distributed ledger technology moving value on the internet without a central intermediary.

Further it has been and could continue to be a catalyst for change in the fields of finance and money. At its core Nakamoto was trying to build a private money system without any central intermediaries.

One of the largest takeaways here is that Gary is lecturing from a TradFi perspective that “blockchain technology good, decentralization bad”. He does not want to fully allow Bitcoin to exist as a 100% decentralized asset – the proposed reasoning will be criminal and illicit activities, but it is already clear that the real issue is loss of power over the financial system.

Fiat currencies are under attack by a decentralized, technology born, specter.

And they want to reign it in with regulation.

“We already live in an age of digital public money..”

Now let me say, we already live in an age of digital money, the Dollar, Euro, Sterling, Yen, and yes Yuan, all are digital. And if you had any doubt about that its obvious during the pandemic.

Who is actually using paper or coinage money in these days?

So such public fiat money fulfill the 3 functions of money. Monetary economists have studied this a long time.

Store of value, unit of account, and medium of exchange.

Why do I raise that?

Because, my opinion is, No single crypto asset broadly fulfills all the 3 functions of money.

“Bitcoin in a sense is a highly speculative store of value..”

No single crypto asset broadly fulfills all the 3 functions of money.

Bitcoin has some of it [ 3 functions of money], but not broadly fulfilling all three, primarily crypto assets provide a digital scarce vehicle for speculative investment.

Thus in a sense one can say they are highly speculative stores of value.

Buy Bitcoin?

It goes up – maybe I have something better for my future or my retirement.

But it’s not really being used as a unit of account.

And we also haven’t seen that crypto has been used much as a medium of exchange. except for one large expectation, to the extent is that it is being used as a medium of exchange to skirt our laws in respect to anti-money laundering, sanctions, tax collection, on the dark web, and yes it’s also enabled extortion via ransomware as we’ve seen recently in Colonial Pipeline and elsewhere.

You see with the advent of the internet 40 years ago and the movement from physical paper money to digital money. We nation states around the globe layered various public policy goals over our digital public money systems. Sanction regimes, anti-money laundering, tax compliance, we did that sort of in this digital public money area. And that’s to what some extent people are using a medium exchange in crypto.

As a policy matter I’m technology neutral.

As a personal matter, I wouldn’t have gone to MIT if I weren’t interested in how technology can expand access to finance and contribute to economic growth and I wouldn’t have spent so much time around the digital currency initiative at MIT and my colleagues there if I didn’t think there was something here that could be a catalyst for real change.

But I’m anything but public policy neutral.

In my current role, as new technologies come along, we need to be sure that we are achieving our core public policy goals.

And in finance, what’s that about?

Protecting investors and consumers.

Guarding against illicit activities.

And ensuring financial stability.

And that’s where it fits into national security interests.

Let us at least be honest about the difference between Bitcoin and all of the Pre-mine Tokens, ICO offerings, and DeFi rugpull scams that have plagued the space for a decade..

Gensler acknowledges Bitcoin as a “real invention” from Satoshi Nakamoto and future use as digital property acting as a store of value and may have some respedct for the future implications that Bitcoin can offer as a catalyst for growth and inclusion in finance.

But his remarks about “Medium of exchange” usage and all of the illicit activities involved..

Purely nonsense and false narratives from the SEC chairman who is claiming to be protecting consumers.

Total criminal share of cryptocurrency activity is LESS than 2.5% as of 2020

Why is Gary pushing this BS narrative about criminal use in Bitcoin and crypto assets?

Clearly setting up for future legislation that will greatly overstep individual privacy and financial decentralization of Bitcoin in the name of “national security interests”. The SEC will also be targeting digital tokens and initial coin offerings (ICOs) for regulation to protect consumers. Many tokens have pre-mines, private sales, scam offerings, and flat out deceptive companies. These are going to be targeting initially as they do the most harm to individuals today.

While many Bitcoiners would fully support cracking down on token scams and the ICOs we seen of old – no one wants the SEC to start attacking Bitcoin’s ability to help free and protect individual financial rights of the human being.

Now it is abundantly clear that the SEC and Mr. Gensler will be targeting exchanges and offshore platforms such as DeFi for regulation to protect consumers and investors. These platforms will need to start adhering by some sort of future crypto asset class regulations. And this could destroy some exchange companies and DeFI platforms, but it will certainly greatly empower decentralization.

It is doubtful that the SEC, or any small nation state legislative body, will be able to restrict or inhibit the decentralization of financial technology for future sovereign individuals.

He fears full decentralization and may pass policy that attacks individual financial freedom

Gary Gensler almost comes off as a Bitcoin maxi, but any Bitcoiner has trouble trusting the SEC or other institutions for a good reason. When you look deeply into his blockchain course we see a simple narrative emerge: fear of 100% decentralization in finance. Although he may embrace Satoshi’s invention as ground breaking and full of utility – it’s usage in the United States is likely to continue to see increasing regulation and taxation attacks this decade.

What other options will be available for future generations to protect their wealth from inflation and fiat currency manipulation?

We are all well aware of what is ahead, we have seen nationstate after nationstate be hit by massive spikes of inflation that destroys the average citizens savings and wealth. How severe inflation could be in the United State will be the only question left to answer.

The Federal Reserve has deeply burned the bridges for future generations to find any safety from inflation and currency manipulation in the United States.

Plan B is all we have.

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