SEC’s Gensler Says Most Cryptocurrency Projects Are Doomed to Fail as Ripple’s Appeal Deadline Approaches

Gary Gensler, outgoing Chairman of the Securities and Exchange Commission, shared his thoughts on regulating the fast-growing cryptocurrency market. While he acknowledged that cryptocurrencies are still a small part of the overall financial markets, he said they are full of bad actors and scams.

Under his leadership, the SEC has brought about 100 enforcement actions in the past four years, compared to 80 actions taken by his predecessor, Jay Clayton. Gensler believes that the cryptocurrency market is still plagued by fraud, with many projects acting like risky investments that may not survive.

In an interview with Bloomberg“This industry is full of bad actors,” Gensler said. He then divided the cryptocurrency market into two parts, saying: “The public knows a lot about bitcoin, which, depending on its market capitalization, represents two-thirds to 80% of the cryptocurrency market capitalization.”

Gensler noted that there are “10,000 to 15,000 projects that raise money from the public.” He believes that many of these projects are merely speculative investments, “in the hope of a better future.” “I’ve worked in finance for over four decades, and everything in the markets is traded based on a combination of fundamentals and sentiment,” he explained. However, he added, “At no time have I ever seen a field wrapped so much in sentiment and not so much in fundamentals.”

Gensler Says Cryptocurrency Projects ‘Won’t Survive’

He also warned that “many of these 10,000 to 15,000 projects will not be able to survive.” They’re like venture capital investments. They won’t be able to survive.” Gensler noted that there were “little pump-and-dump schemes” that caused problems in the industry. “We had a few years where they became notorious, but they’re in prison now,” he said in retrospect.

Despite the increasing number of enforcement actions, Gensler believes that the cryptocurrency market is still not adhering to the rules. He sees his role as ensuring that the market operates without fraud, manipulation and misleading. Gensler is scheduled to resign on January 20 and Paul Atkins will take over as SEC chairman after that.