Gary Gensler, the new chair of the SEC, wants to police new finance with old rules. He spoke with jenwieczner
Gary Gensler, the new chair of the SEC. Photo: Kayana Szymczak/The New York Times/Redux When financial regulators demonstrate that they hold generous views of bitcoin — that, contrary to the prevailing mood in Washington, they believe digital currencies could be more than a conduit for laundering money and buying fentanyl online — the crypto faithful honor them with affectionate nicknames. J.
In other ways, Gensler fashions himself a progressive. He’s the first SEC chief to fully reject the “chairman” title in favor of the gender-neutral “chair.” He had his team contact The Wall Street Journal to ask for a correction when it used the old title, which the paper refused to make on grounds of editorial style. Gensler also resolutely refers to Satoshi Nakamoto, the unknown creator or creators of bitcoin, as “she” — as well as “Nakamoto-san,” out of reverence for the innovation.
One defense of payment for order flow is that it lets brokerages offer free trading that in turn democratizes investing. We’ve seen leagues of purported retail investors band together to trade stocks. Do you consider this market manipulation? It seemed as if they were investing irrationally — particularly when company valuations were way out of whack with their actual business.
The challenge we’re at now, years later, is that thousands of projects have started that haven’t really lived within an investor-protection machine. There are not brokers that stand between us and those markets where we open an account. And the other thing that most people wouldn’t know is this: If you open an account on a crypto exchange or you go to a lending platform, you actually do not own bitcoin or another cryptocurrency. You do not own it.
There’s a range of market structures that can work, but they work best when they’re in some regulatory perimeter. I happen to think a lot of economics shows that transparency works better for investors and issuers than darkness. Central clearing can lower the risks of the market and enhance competition in many cases. When you say “decentralization” — markets over centuries tend toward some centralization. In antiquity, you’d bring the apples or rice or grains into the central market square.
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