Regulatory uncertainty kept coming up at London’s Token2049 conference on Thursday.

Speaking via Zoom, Galaxy Digital CEO Mike Novogratz said U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler was smart and committed but questioned the scope of the regulator’s purview where crypto is concerned.

“Gensler wants to be the sheriff of crypto, but he doesn’t have full authority because of the newness of our industry,” Novogratz told the crowd in London.

Ascertaining whether crypto becomes a security when it’s lent to someone is a nuanced question, the Galaxy chief said, lamenting a period of continued regulatory uncertainty. However, the crypto industry has brought some of this on itself by a lack of education, according to Novogratz.

“The crypto community at large, myself included, didn’t do a good enough job lobbying domestic politicians, educating them, so they really understand what they’re talking about,” he said.

CBDCs loom

The biggest decision is how stablecoins are approached, Novogratz added, warning against options designed to give central bankers better dashboards and describing himself as a “giant alarm ringer” about centralized stablecoins.

“A central bank–issued currency, I think, quite frankly, will be a disaster,” Novogratz said, referring to central bank digital currencies (CBDC). “Governments are not good at innovating and I don’t think anyone in the West wants to give up as much privacy as the Chinese are willing to give up.”

‘Going through this pain together’

A morning panel focused on institutional crypto trading echoed the need for clarity.

Michael Moro, CEO of Genesis Trading (which shares a parent company with CoinDesk, Digital Currency Group) pointed to a cloudy regulatory climate being precipitated by U.S. financial supervisors.

“When Chairman Gensler comes out and says most of the tokens that are out there trading are a security but doesn’t name which ones are the securities, that’s more regulator cloudiness,” said Moro.

Where the U.S. is cloudy, Europe is fragmented, added Darren Jordan, managing director of BitGo Europe. “We are all going through this pain together,” he said.

It’s also a common misconception that crypto is unregulated and like the Wild West, said the panelists.

“It feels like being a bank nowadays at times,” said Max Boonen, founder of crypto trading firm B2C2, and a former fixed-income trader at Goldman Sachs.

DeFi focus

The view from those in decentralized finance (DeFi) was that education should be around how aligned smart contracts and regulation really are, according to Stani Kulechov, CEO of lending platform Aave.

“My academic background is as a lawyer and I’ve always thought smart contracts have a killer use case in regtech,” said Kulechov. “The whole ecosystem is auditable every second by anyone. You can create this amazing risk mitigation that we didn’t have in 2008.”