The chairman of the Securities and Exchange Commission (SEC) has doubled down on his criticisms of Bitcoin (BTC) despite approving a slew of exchange-traded funds for the asset earlier this week.
During an interview with CNBC on Friday, the chairman argued that Bitcoin boasts few use cases aside from illicit activity, and has ironically trended toward centralization across time.
The Irony Of Bitcoin ETFs
Bitcoin descended 6% to $43,500 on Thursday as many investors rotated out of the asset after its highly anticipated ETF launch actually passed.
“Investors, I think, should be aware that the underlying asset is a highly speculative, volatile asset,” said Gensler regarding the ETFs, stressing that the agency does not “approve” or “endorse” Bitcoin.
The chairman expanded on his Wednesday statement explaining the approvals, in which he named “ransomware, money laundering, sanction evasion, and terrorist financing,” among Bitcoin's alleged use cases. Its alleged use cases as a store of value and medium of exchange, he argued, remain suspect.
Furthermore, while Gensler respects certain innovations with blockchain as an “accounting system,” he claimed that there's a certain “irony” around approving an ETF for a supposedly “decentralized” system.
“Think about the irony of those who would say this week is historic,” he said. “Now you can buy [Bitcoin] through this thing called an exchange-traded product that's, well, centralized.”
Many within the Bitcoin community share Gensler's view around ETF products, advising followers to hold their own BTC on a personal wallet where possible, rather than with an ETF.
However, many in the industry argue that ETFs bring Bitcoin access to companies who can't control coins themselves, and can only own assets packaged within an ETF or securities wrapper.
Mining Centralization
Yet even without an ETF, Gensler claimed there's “a lot of centralization” with Bitcoin, with particular respect to its mining firms.
“Even the underlying ledger, largely, the Bitcoin is produced by a handful of mining companies and the like,” the chairman said. Rival currencies, by contrast, have a “common economy” that relies on them.
According to Hashrate Index, just two Bitcoin mining pools control over 50% of the network's hash rate, which is enough to re-write the network's transactions if both pools conspire to act nefariously.
However, those pools are comprised of several other mining firms that can choose to change pools or mine independently at any point.
Last year, Twitter co-founder Jack Dorsey backed a non-custodial new mining pool aimed at decentralizing the mining industry.