Gensler continues to crack the whip on crypto

Table of Contents

• Volatile and speculative
• Crypto is a grown-up asset class
• Investors need hedge against bank failure

SEC Chairman Gensler is urging investor caution when dealing with crypto asset ‘securities’. No mention of what to do if your bank fails is given.

Fresh on the heels of serving a Wells Notice for potential enforcement action on Coinbase, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), has published an Investor Alert on the Investor.gov website with the title: “Exercise Caution with Crypto Asset Securities”.

Volatile and speculative

Full-on war is now declared between the SEC and the entire cryptocurrency sector. The one voice of reason in the SEC is Hester Peirce, who has continually voiced her dissent at how the SEC is regulating crypto by enforcement. However, outnumbered 4 to 1, Commissioner Peirce is powerless to change how the SEC is acting.

The Investor Alert published by the SEC gives the usual warnings that crypto is “volatile” and “speculative” and that these ‘securities’ may not have full protections for investors and that they should know that they can lose their money “entirely”.

Yet again, the Alert runs that no company can offer or sell securities unless it first registers the offering with the SEC. However, history tells us that the registration process for crypto companies just isn’t there, and that any crypto company that tries to register is likely to be sent away with a notice to be sued.

Crypto is a grown-up asset class

The crypto industry is not a tin pot bunch of companies looking to scam investors out of their savings. It is an extremely sophisticated and skilled collection of tech professionals who inhabit a tech space with a market cap of more than $1 trillion dollars.

Investors want to come into this space. They are losing their purchasing power drastically as the Federal Reserve continues to print dollar fiat currency to back stop the banks. There is nothing for the common investor in the legacy financial system.

Being forced out of crypto and having to keep your wealth in the bank is just not an option. Bitcoin is an option, and the SEC’s refusal to grant a Bitcoin ETF is denying U.S. citizens and institutions a regulated and protected way of gaining exposure to a scarce asset that will hedge them against bank failures.

Investors need hedge against bank failure

The SEC Investor Alert article contains the following:

“Investors who deposit funds or crypto assets with a crypto asset securities entity might cease to have legal ownership of those assets and might not be able to get those assets back when they want to.”

Isn’t this exactly the case with depositors money at the banks?

Not many people are aware that the banks have legal ownership of their money once it is deposited. They have the full right to do whatever they want with it, and if the bank fails, it is granted the right to bail-in depositors, just as in the case with the Cyprus bail-ins.

The main difference here is that if a bank fails, the Federal Reserve can just print as much currency as it needs in order to keep that bank afloat. The infantile claim that this extra printed currency doesn’t cost the taxpayer anything is just a lie. All the billions and trillions that are printed are just diluting the money supply even more, adding to inflation, and vastly reducing the purchasing power of the currency.

Hester Peirce called her own agency “lazy and paternalistic”. With full knowledge of what is happening to investors and flat-out refusing to do anything about it, another adjective should be added to the list… evil.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.