SEC Chair Gensler: Crypto is a field ‘that’s been rife with fraud and manipulation’

SEC Chair Gary Gensler joins ‘Squawk Box’ to discuss the approval decision of spot bitcoin ETFs, the state of bitcoin and cryptocurrency at large, crypto regulation, and more.

DAYS OVER $50,000. $51,601. ON THE SET FIRST TIME TALK ABOUT BITCOIN AND A LOT MORE S.E.C. CHAIR GARY GENSLER. GOOD MORNING GRNL. >> GOOD TO BE WITH YOU. GOOD MORNING. >> A MONTH GOING, WHAT YOU THINK IN TERMS OF THE PRICE AND WHAT’S HAPPENING INSIDE THIS MARKET AND

WHETHER YOU THINK IT’S QUOTE/UNQUOTE, WORKING. >> WE FOCUS.V ON INVESTOR PROTECTION AND THE ISSUE IS RAISING MONEY. THIS PRODUCT, WE’VE HAD SIMILAR PRODUCTS IN GOLD AND SILVER, ET, TECHNICALLYEXCHANGETRADED PRODUCTS, AND WE APPROVED A GROUP OF ABOUT 11 AT ONE TIME.

THIS WAS NOT THE FIRST WAY YOU COULD BUY, OR EXPRESS, A RISK IN BITCOIN. BUT AS WE LIKE TO SAY, WE’RE ME MERIT NEUTRAL. THIS WAS NOT IN ANYWAY AN APPROVAL OF BITCOIN. THAT EXISTED. IT’S JUST HOW TO TRADE IT IN THESE EXCHANGE TRADED PRODUCTS.

>> WE’VE HAD BOTH FUTURES BASED ONLY AOR AND BITCOIN ETF BEFORE, AND CURIOUS SORT OF HOW YOU THINK THIS WILL IMPACT THE PRICE OF THESE THINGS, GIVEN THAT — BY THE WAY, INTERESTINGLY. JUST ON, EARLIER THIS WEEKEND SAYING SO FEW BITCOINS ARE ACTUALLY MOVING, AND WHAT WE

SHOULD THINK ABOUT. >> AND I THINK IT’S A LITTLE LESS THAN NEUTRAL, MR. CHAIRMAN. ALMOST WAS, WE CALLED IT GRUDGINGLY, WHEN YOU FINALLY GOT — >> FROM THE COURT CASE. >> WASN’T THERE A LITTLE BIT OF A, WE’RE NOT SURE ABOUT THIS

THING, AND BUYER BEWARE? >> PUT IT THIS WAY. WE’RE MERIT NEUTRAL IS SOMEBODY’S COMPLYING WITH THE LAWS GIVING FULL, FAIR AND TRUTHFUL DISCLOSURES TO THE AMERICAN PUBLIC WHO GOATS DECIDE ON THEIR INVESTMENTS. OKAY? >> YOU’RE SO SMART. AT M.I.T. AND PEEL LIOPLE LISTE

YOU WHAT YOU THINK ABOUT BITCOIN. IT’S TROUBLESOME. I SEE ALL THE MERITS AND SOMEONE THAT TAUGHT ABOUT IT AND UNDERSTAND IT SEEMS TO HAVE AN OPINION THAT MAYBE IT’S-I DON’T KNOW. PET ROCK-ISH OR SOMETHING? >> I GET YOUR WORDS ABOUT PET

ROCKS AND SO FORTH, BUT I THINK WE ALSO HAVE AN INVESTOR EDUCATION RESPONSIBILITY AT THE S.E.C., PARTICULARLY ABOUT THOSE INVESTMENTS THAT ARE NON-COMPLIANT WITH EITHER THE SECURITIES LAWS OR COMMODITIES LAWS AND SO FORTH. HERE WE HAVE AN ASSET CLASS, ALL OF THESE 15, 20,000 CRYPTO

TOKENS. >> YEAH. >> MANY OF WHICH, WITHOUT PREJUDGING ANY ONE, MANY OF CALLED INVESTMENT CONTRACTS OR SECURITIES, AND THE PLATFORMS UPON WHICH YOU TRADE. INTERMEDIARIES. NOT LIKE IN THIS BUILDING, NASDAQ, THAT’S — THAT HAS PROTECTIONS AND, AGAINST FRAUD, MANIPULATION AND THE LIKE.

>> SEEING PEOPLE LOSE THEIR SHIRT WITH NASDAQ STOCKS, TOO. >> YOU CAN LOSE BECAUSE THERE’S RISK. RISK IN INVESTMENTS, WE TRY DO AS A SOCIETY TAKE SOME OF THE FRAUD AND MANIPULATION RISK OUT OF THE MARKETS BY REGULATION STHTS . >> IS THAT THE PROBLEM?

MORE THE FROTH AND THE POTENTIAL FOR FRAUDSTERS TO USE IT THAT IS — >> THIS IS A FEEL, BECKY, THAT’S BEEN RIFE WITH FRAUD AND MANIPULATION. LOOK AT ALL THE BANKRUPTCIES. ON THE SET PEOPLE TALKING ABOUT THOSE VARIOUS BANKRUPTCIES, AND IT’S NOT JUST ONE ENT FIPITY BU

ENTITY AFTER ENTITY AFTER ENTITY AND LINING UP IN THE BANKRUPT COURT. >> UNDERLYING PIECE OF THIS. YOU’VE HEARD JAMIE DIMON SAY HE WOULD CLOSE IT DOWN. BASICALLY BITCOIN — SEEN THE COMMENTS. >> HEARD HIM SAY THAT. >> NOT JUST CLOSE IT DOWN, USED

BY DRUG DEALERS AND USED BY FOLKS DOING ALL SORTS OF ILLICIT AND TERRIBLE THINGS. THERE’S VERY FEW THINGS THAT TRADE TODAY THAT PEOPLE TALK ABOUT LIKE THAT. NOW, THERE ARE OBVIOUSLY FRAUDS AND THINGS THAT HAPPEN, BUT MAYBE NOT LIKE THIS. >> LIKE THE DOLLAR, IS LIKE 100

TIMES MORE. >> THAT’S YOUR PERSPECTIVE. CURIOUS HOW YOU THINK ABOUT THAT. >> THAT’S TRUE, THOUGH. >> THIS IS HOW MUCH HAS BEEN MONEY LAUNDERED WITH BITCOIN. THIS IS HOW MUCH — THIS IS BITCOIN. THIS IS — >> YES, BUT, LOOK. >> HERE’S THE JAMIE DIMON QUOTE.

THE ONLY TRUEST CASE IS FOR CRIMINALS, DRUG TRAFFICKERS, MONEY LAUNDERERS AND — >> THAT’S HIS OPINION. >> WE HAVE A GUEST, JOE. I KNOW. WHAT IS YOUR OPINION AND YOUR OPINION WE HAVE SOMETHING TRADING ON, FOR THE PUBLIC THAT

HAS THIS TYPE OF USE CASE, AT LEAST AS DESCRIBED BY THE PRESIDENT OF ONE OF THE LARGEST — >> LEADING MARKET SHARE — IT’S THE LEADING MARKET SHARE IN RANSOMWARE. PUBLICLY KNOWN. >> RIGHT. >> IT’S THE — THE TOKEN OF CHOICE FOR RANSOMWARE.

JOE, IF I CAN SAY, THE U.S. DOLLAR, THE EURO, THE YEN, YOU HAVE THE WHOLE SOCIETY USING IT AS A MEDIUM OF EXCHANGE. WE BUY OUR CUPS OF COFFEE, AS I SEE HERE. WE GET PAID IN DOLLARS OR YEN OR EURO. AND YOU HAVE A WHOLE CENTRAL

BANK, AND SUPPORT FOR ONE CURRENCY GENERALLY PER ECONOMIC REGION. >> RIGHT. >> THAT WE DON’T HAVE HERE. SO THERE IS A VERY REAL ECONOMIC DIFFERENCE. >> PART OF THE — SINCE CENTRALIZED AND YOU CAN’T HAVE — CAN’T HAVE A CENTRAL BANK.

>> IT’S NOT THAT DECENTRALIZED. >> I KNOW, BECAUSE OF THE ETFs. >> NO. NOT DECENTRALIZED BECAUSE LOOK HOW FINANCE TENDS TOWARD CENTRALIZATION SINCE ANTIQUITY. WE HAVE A HANDFUL OF THREE TO SIX CORE SO-CALLED CRYPTO — >> I UNDERSTAND. THE ASSET ITSELF, THE WAY THAT —

>> RIGHT. HOW THE — >> THE LEDGER — >> HOW MANY TIMES ARE PEOPLE ON THIS SHOW SAY, I DON’T WANT TO INVEST IN SOMETHING BECAUSE HOW THE BOOKS AND RECORDS ARE KEPT? I MEAN, JOE, REALLY? IT’S JUST AN ACCOUNTING LEDGER. >> IT’S A — EVERYONE HAS.

EVERYONE HAS AND CAN’T BE DOUBLE COUNTED? ALMOST IMMUTABLE AND WHY PEOPLE THINK — >> YOU TRUST IT MORE THAN AN ORACLE DATA BA BASE — >> I TRUST IT A LOT MORE. AND A LOT MORE THAN THE CENTRAL BANK THAT ENABLES THE FISCAL

AUTHORITY TO SPEND MONEY TO THE TUNE OF $33 TRILLION. >> THAT’S EVERYBODY’S INVESTMENT CHOICE, BUT — >> THEN I THINK ABOUT HOW MANY THINGS CAN BE USED IN A D DEALITORIOUS AY. NOTHING DO WITH THE WAY YOU’RE USING IT YOURSELF.

I CAN RUN A CAR INTO A PARADE AND RUN OVER — THAT DOESN’T MEAN WE SHOULDN’T HAVE CARS. DOES IT? >> NO. YOU SHOULD HAVE CARS. >> I DIDN’T WANT TO USE GUNS AND TRIGGER, SO TO SPEAK, ANYONE ON THE SET, BUT —

>> WHEN THE USE CASE OF A PARTICULAR THING THAT YOU’RE BUYING AND SELLING IS AN INVESTMENT, IT’S JUST SPECULATIVE INVESTMENT. >> HOW MANY OF THE 90% OF THE PEOPLE THAT OWN BITCOIN USE IT FOR RANSOMWARE? MUST BE — ANOTHER USE CASE THAT

MAKES IT SO ATTRACTIVE, SO MANY PEOPLE ARE INVESTING IN IT. >> RIGHT. >> THAT’S WHAT — OKAY. LET ME ASK A SEPARATE QUESTION, WHICH IS JUST TO PIVOT THIS. I THINK THE NEXT SORT OF ORDER EVENT QUESTION IS WHAT HAPPENS TO ETHEREUM?

THOSE IN THE CRYPTO WORLD ALL WANT TO KNOW HOW YOU’RE THINKING ABOUT THAT. REALLY, IF ETHEREUM IS A SECURITY, HOW DOES THAT ANALYSIS DIFFER FROM HOW YOU WOULD THINK ABOUT BITCOIN? >> WHAT WE DID IN JANUARY WAS — ONE SET OF FILINGS. YOU’RE ABSOLUTELY RIGHT IN FRONT

OF US, BUT I’M NOT GOING TO PREJUDGE IT FOR YOU OR THE