Gensler Says Bitcoin Remains 'Speculative, Volatile'

Bloomberg

Watch Gensler Says Bitcoin Remains 'Speculative, Volatile' - Bloomberg on Dailymotion

Transcript

00:00What do you think of this? We've spent a lot of time talking about this when you were in the job

00:05at the SEC and the many warnings that you made about this potentially risky asset. And we're

00:12witnessing a reckoning in the marketplace right now. What do you think is behind it?

00:17Look, I think it's a risk asset. And in the American public and the worldwide public has

00:24been fascinated with cryptocurrencies. But it's a highly speculative, volatile asset.

00:31And putting aside Bitcoin for a minute, all the thousands of other tokens, not the stable coins

00:38that are backed by U.S. dollars, but all the thousands of other tokens, you have to ask

00:43yourself, what's the fundamentals? What's underlying it? You don't get a dividend. You don't get

00:48usual returns. And so the investing public just needs to be aware of those risks in this highly

00:56volatile space. What do you make of the politicization of crypto? The fact that the

01:01Trump administration has become involved to this extent has reportedly turned off some investors

01:07as they watch the Trump family enrich themselves with gains like this. Is this a Democrat versus

01:14Republican thing now? No, I don't think so. I mean, it's about our capital markets. The U.S.

01:21have the greatest capital markets and they benefit from common sense rules of the road. And when

01:28you buy and sell a stock or a bond, you want to get, you know, various information and you want to

01:34know that you're getting the same treatment as, you know, the big investors. That's the fairness in

01:42these capital markets that are so important. I've heard a lot about the impact of ETFs on this space.

01:50That's something you know a lot about, the initial ETFs that were greenlit to start buying crypto.

01:56Did that just change the plumbing in the crypto market here by tying it directly to the stock market?

02:03Well, ever since antiquity, finance goes towards centralization. So it's not surprised that that

02:13which was started is a decentralized ecosystem. And that was the that was the vision has become more

02:22integrated and and more centralized. Investors can express themselves in gold and silver through

02:29exchange traded funds. And as of a couple of years ago, actually, all the way back to my first

02:35year in the job, there were exchange traded funds on Bitcoin futures, just as there is for gold and

02:43silver. Yeah. Well, Mr. Chairman, I want to ask you about speaking of plumbing in the markets,

02:48what happened at the CME last week and whether you think the CFTC should be investigating

02:55this outage? Should the CME be facing additional scrutiny?

03:01Look, it's something really well understood that our major stock exchanges and futures markets,

03:10the Chicago Mercantile Exchange trades, very consequential parts of our U.S. Treasury market

03:16and interest rates markets, their critical infrastructure. On Thanksgiving evening,

03:22they had an outage at a data center. Importantly, it wasn't actually their computers. It was the

03:28chillers, as I understand it, the cooling system in this data center. And they had an outage for about

03:3510 hours. And so the markets planned for that. The Chicago Mercantile Exchange considered they didn't

03:44go to their backup data center. They stayed partly because it was Thanksgiving evening,

03:51as I understand it. I'm sure that they at the Chicago Mercantile Exchange and the various regulators

03:58will keep looking at it and look for lessons learned. You always look for lessons learned.

04:02And how can we do things better in the future?

04:05Well, we've experienced an incredible number of inquiries about this at Bloomberg.

04:09Our readers are asking, our viewers and listeners are asking about this. It put a real chill in the

04:14markets, to use a terrible pun in this case. Mr. Chairman, you don't sound that worried about this

04:20being systemic.

04:23Look, I think that the New York Stock Exchange, CME, the clearinghouses are systemically important.

04:31No doubt about it. Systemically important. But what happened here at this specific moment is

04:40the cooling system, as I understand, had a glitch. By the way, this data center is operated by a third

04:47party. It's not operated by CME. So they have a contract for certain performance levels. And they

04:54didn't go to their backup data center, which is, I think, located elsewhere in New Jersey. If this were

05:03to happen at 10 a.m. on a Monday, I think the management team would make a different decision and

05:11probably would switch over to the backup data center more quickly. The markets probably would have a little

05:17less liquidity. Not every high frequency trading shop or principal trading firm has the same connectivity

05:24to the backup data center. So that's an interesting business choice. And for your institutional listeners,

05:31if that happened, they'd probably see a little less liquidity until they get back to that primary data center.

Category

Transcript

Be the first to comment

Recommended