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SEC Chair Gary Gensler once again cals for crypto regulation

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Decrypt Editor-in-Chief Dan Roberts breaks down what how Gensler's comments could impact cryptocurrencies moving forward.

Video Transcript

ADAM SHAPIRO: Let's move on and talk about the other big headline today in crypto. And that's the fact that Bitcoin continues to fall. It's trading around $42,000 right now. But there's much more that's going on. So we bring in Dan Roberts, the editor in chief at Decrypt to tell us not only that, but some of the headlines that are taking place at Mainnet, the big crypto conference underway right now at New York City. Dan.

DAN ROBERTS: Well, Adam, I mean, you guys have a banner about China. And that is certainly weighing on the crypto market. But the biggest thing and the best thing to mention right now is as I talked to you, Gary Gensler just did a chat through "The Washington Post." And Gensler, the SEC chair, continues to look not very friendly to crypto.

I mean, we've talked about this. Seana, Adam, you and I have discussed this over the last few weeks. When Joe Biden named Gary Gensler, a lot of people in crypto thought, this is great for us. This is someone who taught a course on blockchain at MIT.

But everything he has said recently is that he views most digital tokens as unregistered securities. And he wants to regulate them as such. And so right now as I report to you, I'm at Messari Mainnet in New York as you mentioned. Decrypt is the media partner. And regulation is on everyone's mind.

I mean, everyone we interview at our little Decrypt booth so far, they're talking about DeFi, NFTs, DAOs. But they're also talking about regulation. And they're trying to figure out how are we going to remain compliant with the SEC guidelines when we can't even really quite tell what the SEC guidelines are right now? It's very opaque. And Gary Gensler has been a little bit of a boogeyman in the room at this crypto conference over the last two days.

SEANA SMITH: You did. I think regulation-- and you're right. You and I have talked about it numerous times in the past. That's a big question mark here going forward, right? And also, I think more largely speaking about what it means for the price of not only Bitcoin, but, of course, when it comes to Ether and a number of the other cryptocurrencies here going forward, I guess from your perspective from the investors that you're talking to at the conference and from who you've been interviewing, I guess do they expect the price to be pretty much range bound until we do get some clarity on that?

DAN ROBERTS: Yeah, Seana. I've asked people about that. I mean, from the investing side, how concerned should investors be? I mean, you know, and again, you see a little bit of a market correction every time Gary Gensler comes out and says something, which for a while was he said nothing.

Now, over the last few weeks, he's starting to do drips and drabs of media opportunities. And again, the things he's saying aren't great from the perspective of crypto people. People invested in these protocols and projects, the entrepreneurs behind them, the CEOs of these projects. But all that said, the tenor and the temperature that I hear from people here is that it'll have a way of working itself out.

We will figure it out. We should play nice with regulators. We want an open dialogue. Of course, the problem is some of these companies, like Coinbase, have come out and said we have tried to approach the SEC and tried to approach Gensler's people. And they don't want to talk to us. And instead, they've chosen the route of enforcement actions and threats and letters.

And by the way, just yesterday at this conference, there was someone who witnessed someone else supposedly gets served a notice by the SEC. The person grabbed this entrepreneur by the escalator and said, you have been served by the SEC.

So everyone here is talking about that. We don't know who it was. Point is regulation is coming to this space, and the SEC is monitoring it. None of that means that Gary Gensler wants to shut down crypto. But he certainly thinks that a lot of these things are securities. And thus, they're under his jurisdiction. And he wants to regulate them.

ADAM SHAPIRO: Dan, we talked with you the last time. You know, it's as if the Coinbase people are screaming we're on your side. Why are you doing this to us? But you just hit an issue. I've been watching articles in "The Wall Street Journal" and in other national publications that are trying to make a differentiation between-- we call it cryptocurrency.

But they keep saying in these articles these are not currencies. These are assets. Help us understand, because at places, like in some South American countries, these are currency.

DAN ROBERTS: Yeah. It's a really fair question. And actually, Adam, a lot of times people are asking me for just Crypto 101. And I start by saying that I think cryptocurrency has become something of a misnomer. They're really not used as currencies.

Now, you're right that the original promise of Bitcoin was for remittances, faster, frictionless, cheaper, sending international money transfers. And a lot of people still use it that way. And in certain countries, the unbanked and the underbanked receive their pay via Bitcoin. And then they convert it to their local government currency.

That's still happening in some places. And that's great. But for the most part, it's not a currency. I call them digital assets. I think that's a much better term. And a lot of people mentioned that the initial Bitcoin white paper said a peer to peer electronic cash system. And people say, well, it's not being used that way. It's not cash.

That's true. But use cases of technologies evolve over time. And right now for now, people are mostly using Bitcoin as a buy and hold investment ala digital gold. And then separately, Ethereum is this completely separate network for smart contracts that a lot of business applications are being built on.

So a long way of saying, I think you're right. I think over time, people are going to use the term cryptocurrency less and less. Now, maybe crypto will hold as a catchall for this whole industry. But think of them as just digital only assets. And they're all different.

ADAM SHAPIRO: And I don't know if this is getting any kind of discussion it may net. But in one of those articles they pointed out, I think the figure was something like 20% of Bitcoin is not retrievable because people have either lost their passcodes. Or there's the case of the guy who died. Is anybody working on trying to crack those codes to get the password so they can claim it? That's a lot of money.

DAN ROBERTS: It's a tough one, Adam. And, you know, about a year ago over the summer, there was a "New York Times" story that went kind of viral. I understood why it did. And the headline was Meet a Bunch of People Who've Lost Their Keys. And so they can never access their Bitcoin wealth.

And you see those headlines. You go, Oh, my God. And I actually think that's what keeps a lot of people away from the space. What people need to understand is you don't have to hold your own keys. Now, crypto purists will tell you you should, and it's the safest way.

But I think that's why something like Coinbase has been so successful, because for most regular people who want to dip a toe into Bitcoin, they're happy to just let a centralized exchange like Coinbase hold on to their keys for them. And they trust that Coinbase isn't going to lose their crypto.

But in terms of retrieving that part to Bitcoin on the Bitcoin blockchain that-- that people have lost their keys, really hard to do, because the whole design of the blockchain is such that you're supposed to have both keys-- you're public and your private address.

The public one you can give to friends, they would send you Bitcoin. But you have to have the private one in order to access-- that is move the funds. So I don't know about recovering that lost Bitcoin that's just sitting there and can't be accessed again.

ADAM SHAPIRO: It is always good to see the editor in chief from Decrypt, Dan Roberts, who is live with us from Mainnet, the conference in New York City. One of the largest cities in the tri-state area--

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