SEC Chairman Says Bitcoin Is Decentralized After Approving ETFs

The chairman of the Securities and Exchange Commission (SEC) has doubled down on his criticism of Bitcoin (BTC) despite approving the exchange of funds earlier this week.

In an interview with CNBC on Friday, the chairman argued that bitcoin has few uses other than illegal activity and has ironically become more centralized over time.

The irony of Bitcoin ETFs

Bitcoin fell 6% to $43,500 on Thursday as many investors turned away from the asset after the highly-anticipated ETF launch passed.

“Investors, I think, need to understand that the underlying asset is a very speculative, volatile asset,” Gensler said of the ETF, stressing that the agency does not “endorse” or “endorse” bitcoin.

The chairman expanded on Wednesday's statement, explaining his approval of what he named “ransomware, money laundering, sanctions evasion and terrorist financing” as among the issues that Bitcoin has been used for. He argued that the alleged use of the case as a store of value and currency was still suspect.

Gensler also said that while he applauds some innovations in blockchain as a “system of accounting,” there is some “irony” in endorsing an ETF for a so-called “decentralized” system.

“Consider the irony of people saying this week is historic,” he said. “You can buy now [Bitcoin] On this side, it's a good, centralized, exchange-traded product.

Many in the Bitcoin community share Gensler's views on ETF products, recommending that followers hold their BTC on personal wallets whenever possible rather than ETFs.

However, many in the industry argue that ETFs bring access to Bitcoin to companies that cannot control the coins themselves and can only hold assets packaged in an ETF or securities wrapper.

Centralization of mining

But even without an ETF, Gensler says there is “a lot of centralization” in Bitcoin, especially when it comes to mining companies.

“Even the basic ledger, for the most part, Bitcoin is produced by a few mining companies and so on,” said the chairman. Rival currencies, on the other hand, have a “shared economy” that depends on them.

According to the Hashrate Index, two Bitcoin mining pools control more than 50% of the network's hash rate, which is enough to overwrite the network's transactions if both pools conspire to commit malicious acts.

However, those pools consist of many other mining companies that choose to change pools or mines at any time.

Last year, Twitter founder Jack Dorsey backed a new non-custodial mining pool aimed at decentralizing the mining industry.