• Gensler cautions that most cryptocurrencies lack fundamental backing, making them highly speculative investments.
• Bitcoin is the only cryptocurrency Gensler considers a commodity, distinct from other tokens.
• Vanguard’s shift to offer crypto ETFs marks growing institutional acceptance of digital assets.

Former SEC Chairman Gary Gensler recently shared his concerns about cryptocurrencies, emphasizing the high risks involved, especially with digital assets other than Bitcoin. His comments came after a week marked by market volatility and institutional shifts. Gensler stressed the importance of understanding the fundamentals behind cryptocurrencies, warning that many tokens lack substantial backing.

Bitcoin: A Unique Commodity in Crypto Market

Gensler was of the opinion that Bitcoin and the rest of the coins did not have the same value; therefore, they could not be evaluated in a similar manner. In his view, only Bitcoin met the requirements for a commodity in the world of cryptocurrencies. 

Gensler’s argument was that, unlike other tokens, Bitcoin was not dependent on the prospect of dividends or financial returns for its value. He remarked that the majority of other digital coins were not even close to being backed by anything fundamental, hence not suitable for long-term holding.  

He specifically referred to the situation of most tokens that are present in the market and said they have no income or financial returns that are very real and, thus, they are extremely speculative. So, investors are advised to be very careful when considering cryptocurrencies for their portfolio that are not supported by underlying value or fundamental assets.

Vanguard Shifts Stance on Crypto ETFs

The very first of the concerns raised by Gensler was the speculative nature of most cryptocurrencies, whereas digital assets have been gaining institutional adoption continuously. As it was reported by CryptoNewsLand earlier, Vanguard, one of the world’s largest asset management firms, has only recently changed its mind about crypto investments. 

The company now gives its 50 million customers the option to trade Bitcoin, Ethereum, XRP, and Solana ETFs, which is a clear indicator of the change in the institutional standpoint on crypto to a great extent. Vanguard’s move around was guided by the new CEO, Salim Ramji, who previously worked on the launch of Bitcoin ETFs at BlackRock and has experience in that area. 

This decision indicates the beginning of the era where there will be a smooth flow of blockchain technology in traditional financial systems. The change in policy took the market by surprise, and Bitcoin went up 6% right after the announcement. The values of other cryptocurrencies, such as Ethereum and XRP, also went up significantly.

SEC Focuses on Market Stability Amid Changes

During his interview, Gensler also talked about the overall market and brought up the issues raised by the ten-hour outage at the Chicago Mercantile Exchange. The outage, which was due to a failure in the cooling system, caused a temporary suspension of trading. Gensler said that, probably, the management team would have handled the situation differently if it had occurred during the normal trading hours. 

With the SEC keeping a close eye on the cryptocurrency market, Gensler pointed out the necessity of making sure the industry works under a system that allows for and encourages fairness and transparency. His remarks signal the ongoing attempts to come up with reasonable regulations for the fast-changing digital asset world.