SEC Chairman Gary Gensler does not see decentralization as a fact of the cryptocurrency market, despite the fact that digital currencies originated as an attempt to circumvent centralization.
Central intermediaries tend to benefit from scale, network effects and access to valuable data, Gensler said. Centralization tends to re-emerge even as technological innovation continues to disrupt existing business models.
Gensler warns:” We are even seeing centralization in the crypto market, which is built on the idea of decentralization. This area is actually very concentrated among the intermediaries in the middle of the market. Therefore, we must be wary of those areas where concentration and potential economic rents have risen or may rise in the future.”
Gensler asked exchanges to step in and ask securities regulators if they were unclear whether a cryptocurrency or token could be considered a security, and said the SEC could study on a case-by-case basis whether exemptions for specific items are required.