Quote · Freakonomics Radio
684. He Helped Clean Up the Last Crash. Does He See Another One Coming?
Where this was said
Crypto, the SEC, and the Trump Administration's Reversal
At 52:28 · chapter starts 49:20
Gensler acknowledges the tension inherent in a functioning democracy: new administrations can and should shift policy. But he draws a distinction between legitimate policy reversal and something more troubling. He defends his SEC record — of roughly 45 regulations, only a handful were overturned, mostly in the Fifth Circuit in Texas and Mississippi, including his push for greater transparency in private equity. On the deeper crypto question, Gensler is pointed: capital markets throughout history have mixed fundamentals and sentiment, but crypto feels almost entirely sentiment-driven. He credits Satoshi Nakamoto with creating an interesting ledger system — blockchain technology — but notes, pointedly, that no financial or crypto firm actually uses blockchain to keep its own books and records. The real-world use cases for moving crypto assets permissionlessly, he says, include avoiding sanctions and money laundering. He's skeptical of the friction-reduction argument, citing Visa and Mastercard's $400–700 billion market caps as evidence that payment system frictions create enormous economic rents — but noting the US payment system is otherwise highly efficient.
Stablecoins are at $300 billion and could hit $2 trillion. If that happens with loose regulation and no money-laundering compliance, Gensler warns it would gut the US banking system. Meanwhile, Tether may have 20% of its backing in non-dollar assets.
