What Did The SEC’s G. Gensler Say To The WaPo About Stablecoins And Evergrande?

The Chairman of the Securities Exchange Commission, Gary Gensler, showed his cards. He spoke with legacy-media-operation The Washington Post and host David Ignatius for their series “The Path Forward” and spilled the beans. We at NewsBTC saw the whole interview so you don’t have to. We selected the most crucial quotes, and present them in all their splendor for you all to read them and reach your own conclusions. 

Of course, we’re going to offer our two cents. We’re not made of steel. In general, though, you’ll get Gary Gensler’s unadulterated words. They’re shocking enough as it is.

Gary Gensler Is Looking Directly At Stablecoins

Even though host David Ignatius had no questions about stablecoins, the topic was on Gensler’s mind. The SEC’s Chair brought it up a couple of times. First, he said:

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“On something called stablecoins, and how the banking agencies–and we, too, market agencies–coordinate because these stablecoins may have attributes of investment contracts, have some attributes like banking products, but the banking authorities right now don’t have the full gamut of what they need.”

But his organization is not only thinking about stablecoins and trying to define them and isolate their attributes. They’re preparing a formal document:

“We’re working right now under the guidance of Secretary Yellen and working on a report around stablecoins, and in the world of stablecoins, I do think that there would be some help from Congress.” 

This doesn’t seem that bad. Their report could conclude that stablecoins are a useful innovation and tool that the whole financial system can benefit from, right? Wrong. This is what Gensler and the SEC think about stablecoins, and pay attention to the language:

“These stablecoins are acting almost like poker chips at the casino right now; so, add to the Wild West analogy. I mean, we’ve got a lot of casinos here in the Wild West and the poker chip is these stablecoins, you know, at the casino gaming tables.”

Things are about to get interesting for stablecoins, it seems.

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Does The SEC Want Crypto Exchanges To Register?

Look, there are no two ways about this. Gary Gensler wants all exchanges, including decentralized ones, to register with the Securities Exchange Commission. To convince them, he asks for the exchanges to come to him:

“I think it would be better–the platforms that are trading securities, the platforms that have lending products, who have what’s called “staking products,” and I’m glad to describe that for your listeners, but where you actually put a coin at the platform and you earn a return–that they come in and we sort through, figure out how best to get them within the perimeter.”

And, you might ask, what perimeter is that? Well, this quote makes it very clear:

“I think at $2 trillion, 5- or 6,000 projects, that it would be better to be inside investor-consumer protection, inside the tax compliance and anti-money laundering and financial stability.”

This goes in line with recent declarations from Gensler about the need for crypto regulation:

“Gensler believes that if the market is to grow, then it needs to embrace regulation. The SEC chairman explained that regulation would provide trust in the market, which is important if the market does not want to become irrelevant over time. “Finance is about trust, ultimately,” Gensler said. Gensler’s focus is mostly on trading platforms, given that this is where the majority (~95%) of activities in the crypto market are carried out.”

Is Gary Gensler Even a Cryptocurrency Enthusiast?

Since the new Head of the SEC once taught a class on Cryptocurrencies at MIT, people assumed he would be a pro-crypto legislator. Is he, though? Let’s read what he said about the subject specifically:

“I do think this new technology is a very interesting–and whomever she was, Satoshi Nakamoto, it’s led to change. It’s pushing at the side of central banks around the globe to reconsider how to provide payment systems. It’s pushing on the side as a catalyst for change in finance, so-called “fintech,” the intersection of new technologies and finance.”

So, a non-comital opinion. However, Gensler feels strongly about bringing cryptocurrencies into a public policy framework. So strongly, that he said, “I don’t think technologies long last outside of a social and public policy framework.” And then, “I think it’s better to bring it inside the public policy framework and ensure that we address these important public policy goals.” And later on one more time, “So, new technology is generally a good thing; it challenges the establishment. But I don’t think that new technologies really long exist outside of public policy frameworks.

Does Any Of This Have To Do With Evergrande?

Days after our report about the situation, Evergrande became one of the biggest stories of the year. We explained that the company reportedly owes $300B, and the most likely cause for all that:

“Apparently, China Evergrande was caught in a loop. The company was pre-selling apartments and using that money to fund other projects, in which they also pre-sold the apartments and the cycle started again. Evergrande bonds are suspended, and there’s a chance they won’t be active ever again. They might be worthless. The stock is near its all-time low, it has lost nearly 80% of its value this year.”

Of course, The Washington Post’s Mr. Ignatius had to bring the subject up. He said that analysts are worried that there could be “contagion in financial markets, like what we remember from 2008 and the failure of Lehman Brothers.” Then, he asked: “Are you confident that our financial markets today are protected in the event that there was such a failure, not necessarily over this company but any large company with that level of debt?” 

Gensler refused to comment on a Chinese company, that’s out of his jurisdiction. To the question, he answered:

“I do think the reforms after the 2008 crisis stood up a much stronger U.S. financial system. It doesn’t mean that there aren’t issues that we look at, at the SEC and other important regulators like the Federal Reserve and the bank regulators and CFTC, that I once was honored to chair. But I do think that we’re in better position in 2021 to absorb some of those shocks than we were prior to the ’08 crisis, but it doesn’t mean we’re isolated. Our economies are connected around the globe.”

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In 2014, Selected MIT Students Got $100 Of Free BTC. What Did They Do With It?

This fascinating experiment involving free BTC generated concrete results and we’re here to review them. The feel-good story arrives courtesy of CNBC, who interviewed some of the protagonists and got to the bottom of things. It all started with 19-years-old Jeremy Rubin, who developed a program called Tidbit. It  allowed “users to mine for Bitcoins on a client’s computer as a replacement for traditional advertising.” The authorities weren’t so keen on his idea, as the Electronic Frontier Foundation remembers:

In December 2013, the New Jersey Attorney General’s office issued a sweeping subpoena to Rubin and Tidbit, seeking Tidbit’s source code, documents and narrative responses about how Tidbit worked, which websites it was installed on and the Bitcoin accounts and wallet addresses associated with Tidbit.

Related Reading | MIT BTC Project Goes Live, Offer $100 of Free BTC to Undergrads at MIT

They eventually dropped the investigation, but one good thing came out of it. He realized that even though he thought “everyone was super cutting-edge” at MIT, not many were familiar with Bitcoin. So, logically, he raised “half a million dollars in donations from alumni and bitcoin enthusiasts” and the free BTC experiment was born. 

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Were There Conditions To Get The Free BTC?

The idea was for undergrad students to “complete a few questionnaires and review educational materials,” and to “set up their own crypto wallet, which at the time was hard enough to discourage participation.” Still, 3,108 students got $100 of free BTC. At the time, Bitcoin’s price was $336, so they got about 0,3 BTC each. At today’s price, that would be worth about $13.500. 

“We wanted to get bitcoin out in the world more, and we wanted to spread the technology,” said Rubin. “We also wanted to study what it means to distribute a new asset.”

How Many Sold Or Spent The BTC?

Luckily for the history books, researchers traced the project. Apparently, “1 in 10 cashed out in the first two weeks. By the end of the experiment in 2017, 1 in 4 had cashed out.” Paper hands, sure, but remember that no one had any idea if Bitcoin as a whole was going to pan out. CNBC quotes Christian Catalini, one of the researchers:

“Even at the time, the technology was quite user unfriendly,” he said. “Even within a pretty tech-savvy community such as MIT, it was kind of surprising to see how much work it really was to use bitcoin at the time.”

Still, 3 out of every 4 held on to the BTC, which is pretty impressive. “What was fascinating is that in a sense, the MIT students got it right. The vast majority held on to their bitcoin as an investment.” Did they, though? Or was it so difficult to use and unknown by vendors that they didn’t even bother? 

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BTCUSD price chart for 08/18/2021 - TradingView

BTCUSD price chart for 08/18/2021 - TradingView

BTC price chart for 08/18/2021 on Bitstamp | Source: BTC/USD on TradingView.com

What Did The Students Do With Their Free BTC?

Well, long story short, they spent the free BTC on sushi. CNBC managed to track two of those students that, somewhat ironically, now work in the crypto space. One, Sam Trabucco, serves as Co-CEO of Sam Bankman-Fried’s Alameda Research. The other, “Van Phu, now a software engineer and co-founder of crypto broker Floating Point Group.” 

“One of the worst things and one of the best things at MIT is this restaurant called Thelonious Monkfish,” said Phu. “I spent a lot of my crypto buying sushi.”

Related Reading | Uniswap Labs Limits Access To Certain Tokens, What It Could Mean For The DeFi Sector

So did Trabucco, who remembers the experiment as an important experience for the people involved. He spent the free BTC because he “didn’t really think it was going to be the future of finance.” Still, he considers that maybe already having a Bitcoin wallet set up might’ve sent him on the path to head a firm as big as Alameda Research.

All’s well that ends well.

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Bitcoin Investment Experiment Yields Jaw-Dropping 13,000% Returns

Participants in a study at the Massachusetts Institute of Technology (MIT) who were gifted free Bitcoin are witnessing a meteoric rise in the value of their crypto asset.

In 2014, the MIT Bitcoin Project offered every undergraduate student in the Cambridge, Massachusetts campus a chance to claim $100 in Bitcoin. All they had to do was complete a questionnaire to receive what was then a larger fraction of the cryptocurrency.

Bloomberg reports that of the 3,100 students that participated in the experiment, one in four participants cashed out their crypto assets when the experiment ended in 2017.



Some participants used their profits to buy a new pair of shoes or food. Others forgot about their holdings and some lost their BTC because they could no longer access their digital wallet where the Bitcoin was stored.

It is not clear how many alumni still have their free Bitcoin from the experiment, but 24-year-old Mary Spanjers, a freshman at the time, says she still has her free cryptocurrency.

As the price of Bitcoin reached new all-time highs this year, the $100 worth of BTC that Spanjers received in 2014 reached as much as $20,000 in value. Even after the price of the crypto asset plummeted in May, the free Bitcoin is still worth around $13,000, marking a 13,000% increase over the last seven years.

Spanjers, who now works as a software engineer for Schlumberger oil firm in Houston, says she almost used her BTC to buy a $35 “Doppler Effect” T-shirt for her dad. Had she not changed her mind, she says the T-shirt could have been worth $4,000 today.

“My dad would have had the most expensive T-shirt ever.”

At time of writing, Bitcoin is trading at $36,156, according to CoinGecko.

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MIT, MicroStrategy, Others, Launch Multi-Year Project to Strengthen Bitcoin

The Digital Currency Initiative (DCI) of the Massachusetts Institute of Technology (MIT) has raised $4 million from blockchain industry leaders including MicroStrategy, CoinShares, and others, for a multi-year project aimed at strengthening the Bitcoin network, according to a press release on February 25, 2021.

Improving Bitcoin’s Robustness and Security 

Since its creation by Satoshi Nakamoto 12 years ago, the Bitcoin network has only been down on two occasions, and during those times, the dedicated development team quickly fixed the bug, giving rogue actors no chance to exploit the loophole.

In a bid to further strengthen the robustness and resilience of Bitcoin, MIT Media Lab’s Digital Currency Initiative (DCI), a research community dedicated to distributed ledger technology (DLT) and crypto, has joined forces with industry leaders to launch a new Bitcoin Software and Security project.

As stated in its press release, the four-year project has raised $4 million out of its $8 million targets from notable Bitcoin whales including Twitter & Square CEO, Jack Dorsey, Michael Saylor of MicroStrategy, Gemini’s Winklevoss twins, CoinShares and Fidelity Digital Assets, among others.

“Bitcoin is the most important innovation since the advent of the creation of the internet, and it is our responsibility to invest not only in the asset but also in the underlying infrastructure that is maintained and improved by open-source developers and nonprofit institutions like MIT’s DCI,” said Michael Saylor.

Hardening the Bitcoin Protocol 

Notably, the team has made it clear that the funds will be used to hire more researchers and open-source blockchain developers that will carry out the mission of “hardening the Bitcoin network on a long-term basis.

What’s more, in the next four years, the DCI and its members aim to increase the total number of Bitcoin Core developers to at least eight researchers and engineers, to make it easier for the Bitcoin ecosystem to handle new threats.

The team says it also looks to build-up solid long-term defenses against all manner of bugs on the network by pointing its searchlight into safer programming standards, “preemptively investigating, monitoring, and strengthening the software against attacks, improving automation, writing new tests and security tools, and decreasing reliance on scarce exports.”

As crypto adoption continues to move in an upward trajectory, initiatives like this are certainly a forward-thinking maneuver that will further ensure the continued well-being of the ecosystem, even though the Bitcoin network is robust enough to withstand quantum computing and other threats.

At press time, the price of bitcoin (BTC) is down by 16.63 percent in the weekly timeframe, trading at $47,106, with a market cap of $878.87 billion, as seen on CoinMarketCap.

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Decentralization in the centers of power: Learn crypto from Biden’s SEC chair pick, part 3/3

This is the third article in a three-part series based on Gary Gensler’s extensive prior public statements on crypto. Here are parts 1 and 2.

Cointelegraph has been busily digging through a treasure trove of likely future Chairman of the Securities and Exchange Commission Gary Gensler’s thoughts on crypto, especially from a series of lectures he gave at MIT in the fall of 2018. One especially notable element of Gensler’s thinking is his obvious respect for Bitcoin’s mechanism of internal governance and his obvious interest in seeing that decentralization elsewhere in finance.

12 years out from BTC’s genesis block, there aren’t many serious characters in the U.S. federal government calling for anything as misguided as a Bitcoin ban. Even antagonists recognize that such a measure would be impossible. But beyond just tolerance, Gensler is clearly intrigued by Bitcoin’s mechanisms for internal decentralized regulation and bullish on applying their principles elsewhere in finance.

Gensler goes decentral

Famously, the SEC has decided that Bitcoin is a commodity, falling under the purview of the Commodity Futures Trading Commission (which Gensler chaired during the Obama years) rather than the SEC. Consequently, Gensler’s decisions at the SEC will be fairly oblique in the way that they touch the original cryptocurrency, but his overall appraisal of Bitcoin’s governance shows a refreshing level of knowledge, as well as an obvious respect for the tenets of decentralization.

“There’ve been many efforts that all died, until Bitcoin, to crack that riddle that we talked about: peer-to-peer money without a central authority,” Gensler said, while discussing Satoshi Nakamoto’s original whitepaper with a crowded lecture hall. Beyond simply being impressed with the technological achievement of Bitcoin and its “monetary policy that limits the supply of the currency,” he was supportive of the ability for transactions to be free from third parties.

“When you’re dealing with a central authority, a commercial bank, they can decide whether to extend credit or not. That’s a form of censorship. It’s a form of allocating something,” Gensler said. “But distributed decentralized platforms are more censorship resistant

It’s almost paradoxical to think of someone so deeply ingrained in the traditional centers of financial power. Before his regulatory career, Gensler got his start in finance working for Goldman Sachs. He’s coming from very much the centers of power, which makes it pretty remarkable that he identifies established industry players as pushing for regulation at the expense of new start-ups:

“One thing that wasn’t mentioned is sometimes institutions want to be regulated over time, because it creates barriers to entry. It’s usually not at an early stage. But later on, it creates some barriers to entry, and it’s actually the incumbents who often collect some economic rents.”

The many costs of mining

Mining is obviously a central feature of Bitcoin’s system of governance. It’s also remarkably controversial, with recent estimates saying that the Bitcoin network consumes more energy than the Netherlands. Indeed, the bad PR of Bitcoin’s electricity use has inspired a surge of renewable energy firms to enter the industry. But Gensler took time from his lecture to defend Bitcoin’s energy use as compared to the many overlooked externalities of all the other monetary systems of the world:

“I would note that all strong currencies — strong monies — for centuries have had something to limit the supply. And so now we’re doing it electronically and through this mining. That doesn’t mean it’s the best use. I’m just saying it’s another way. Extracting gold out of the ground is very hard. And in the 19th century, to have big vault doors and security guards with rifles was a way to insure it. And one could even say that having central banks takes cost. So I think of it as a trade-off of how you ensure a currency as a harder currency to create.”

Limits, though

Despite his clear sympathy for decentralization, Gensler is not exactly bullish on Bitcoin. “We’re not going to be a Bitcoin minimalist or maximalist. I’m probably, to self-disclose here, a little bit center-minimalist on Bitcoin,” he says to his classroom at one point. Later on, he told the class that he did not own any Bitcoin himself — although, as always, that could be OPSEC.

On the subject of mining, Gensler noted several long-standing concerns aside from energy usage. One is that the massive mining pools have effectively centralized the system, rendering a 51% attack more likely than is comfortable. Another is that Gensler suspects that the most successful miners are successful based on illegal activity:

“I truly believe — but can’t factually prove — a number of the biggest mining pools or miners are in places where they’re doing illicit activity. They’re getting their electricity for less than what it’s really costing on the grid by bad actors.”

Even these issues with the particularities of Bitcoin don’t diminish the fact that Gensler clearly believes in the importance of decentralizing governance. “I’m more into democratizing capital markets,” he says at one point.

So what does all of this mean? Gensler is certainly no crypto-anarchist, and he’s definitely not interested in rolling back crypto regulation to where it was in 2018. But his sympathy towards decentralizing finance is clearly strong. In his lectures, he comes off sympathetic to strong protections for transactional privacy and the process of crypto tokens beginning their lifecycles as centralized projects before becoming decentralized currencies. This will be a critical area at the SEC, especially as co-commissioner has already spent the last year pushing for a safe harbor for such projects.


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Reuters: Gary Gensler, MIT blockchain professor and Obama’s CFTC chair, to head Biden SEC

President-elect Biden has finally decided on his nominee to head the Securities and Exchange Commission.

At least according to Reuters’ anonymous sourcing in a Tuesday report, Gary Gensler will be Biden’s nominee as SEC Chair. During the Obama administration, Gensler was the chairman of the Commodity Futures Trading Commission, in which capacity he was in charge of enforcing the many new provisions of the Dodd-Frank Act that followed the 2008 financial crisis.

Gensler has spent most of the Trump years at MIT, teaching courses on digital assets and blockchain. If nominated, there is little doubt that a now-Democrat-controlled Senate would be willing to confirm him. Gensler would likely be the most crypto-informed person to lead the SEC. 

Former SEC Chair Jay Clayton, who stepped down in December, was known for pursuing initial coin offerings throughout his term. It was early in his tenure that the commission released its DAO Report, its first declaration that digital assets could be securities and would, therefore, be subject to the SEC’s jurisdiction. 

Gensler has been a leader in financial policy on Biden’s transition team since shortly after Biden’s electoral win at the beginning of November. There was a great deal of speculation at the time as to Gensler’s prospective role in the coming administration, with many predicting the SEC.