SEC Chairman Gary Gensler Says Cryptocurrencies Actually Not Decentralized

Chairman of the US Securities and Exchange Commission Gary Gensler. (Photo; Doc. BTC Haber)

JAKARTA – So far, cryptocurrencies have been touted as being decentralized or not centralized, the chairman of the US Securities and Exchange Commission (SEC) Gary Gansler has a different opinion. According to him, activity in the crypto industry actually shows a centralized tendency.

Recently the SEC chairman stated that the crypto market, ironically, is not decentralized. Gensler argues that there is significant market dominance among some “middlemen" in the crypto industry, which hinders competition.

In remarks delivered at the annual meeting of the Securities and Financial Markets Industry Association, Gensler assessed that central intermediaries in financial markets are likely to benefit from “scale, network effects, and access to valuable data."

“Despite repeated technological innovations disrupting incumbent business models, centralization still tends to reemerge", said Gary Gensler, quoted from CryptoPotato.

As the SEC chairman noted, only four asset managers in the US now control more than 80 percent of the total assets held in index funds of US-listed investment firms. Equity market makers who are responsible for handling retail market orders also tend towards centralization, as execution mostly takes place off-exchange.

Gensler argues that the trend toward centralization extends even to the crypto market, “founded on the idea of decentralization."

"This field actually has a significant concentration of middlemen in the middle of the market", he said. "As such, we must remain alert to areas where the concentration and potential of the economic chain have already been established or may do so in the future."

Furthermore, the SEC chairman revealed that the big players in the crypto industry today are the crypto exchanges themselves which facilitate the trading of digital assets. During the industry-wide crisis following the crypto market crash throughout May and June, bankrupt companies turned to the world's leading exchanges like FTX and Binance for bailouts and support.

“Because it deals with intermediaries, so-called crypto exchanges or lending platforms and the like, they are very centralized", says Gensler.

The world's number one crypto trading company, Binance, continues to spread its wings across various sectors of the crypto industry - from cloud mining to stablecoins. In fact, Binance has its own blockchain. Despite all that, the tendency to be centralized is a challenge for the decentralized crypto space.