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00:00CHAIRMAN. GARY: GREAT TO BE WITH YOU. ALIX: WHAT DOES THAT TELL YOU ABOUT THE VALIDITY OF THIS GOING FORWARD? GARY: I THINK THE TECHNOLOGY, WATCHING TECHNOLOGY WHICH THE PUBLIC KNOWS HIS UNDERLYING BITCOIN HAS A REAL CHANCE TO BE A CATALYST FOR CHANGE IN THE WORLD OF FINANCE. THAT IS BECAUSE IT MOVES DATA AND ALSO APPLIES CODE ACROSS A DECENT -- A DECENTRALIZED NETWORK. WE SEE THE LIKES OF SHEILA AND GARY COHN AND I AM TEACHING AT M.I.T., AND THE CLASS IS CROWDED. A LOT OF PEOPLE WANT TO KNOW ABOUT THIS TECHNOLOGY. ALIX: HOW DO YOU REGULATE IT? GARY: IF IT GETS BROAD ADOPTION AND YOU REALLY THE CRYPTO WORLD IS GOING TO BE PART OF THE FUTURE, IT NEEDS TO COME INSIDE OF PUBLIC POLICY. WE NEED TO GUARD AGAINST ILLICIT ACTIVITY AND WE NEED TO PROTECT INVESTORS. THE CRYPTO EXCHANGES, EXCHANGES LIKE COINBASE NEED TO COME WITHIN SEC OR THE CFTC. INSIDE OF SOMETHING TO PROTECT INVESTORS. DAVID: WE ARE SEEING CRYPTOCURRENCY AND BLOCKCHAIN BECAUSE THE CURRENCY MAY RELY ON BLOCKCHAIN BUT YOU CAN DO THINGS WITH BLOCKCHAIN THAT YOU DON ' T DO IT CRYPTOCURRENCY. DO NEED TO REGULATE BLOCKCHAIN? WE DON ' T NORMALLY REGULATE COMPUTER PROGRAMS. GARY: I COULD NOT AGREE MORE. WE NEED TO BE TECHNOLOGY NEUTRAL BUT STILL NOT REGULATE THE BLOCKCHAIN TECHNOLOGY BUT ENSURE THAT ITS APPLICATION LIKE EURO CURRENCY -- LIKE CRYPTOCURRENCY, INVESTORS ARE STILL PROTECTED. INVESTORS DO NOT SUFFER FROM FALL -- FROM FRAUD. DAVID: -- SEEMS TO BE MOVING VERY FAST. DO WE HAVE THE PERSONNEL WITHIN THE FEDERAL GOVERNMENT TO BE ABLE TO UNDERSTAND THIS ENOUGH TO KNOW WHETHER THERE IS FRAUD GOING ON? GARY: IT WAS ALWAYS A CHALLENGE, THAT IS TRUE. I DON ' T THINK THAT MEANS WE GIVE UP. WE SHOULD STILL TRY AND PROTECT INVESTORS AND THEN THERE IS MORE CONFIDENCE IN MARKETS AND WHERE THERE IS CONFIDENCE IN MARKETS, THE MORE PEOPLE CAN PARTICIPATE. WE ALREADY HAVE SOMETHING CALLED A BITCOIN FUTURE ON THE CHICAGO MERCANTILE EXCHANGE. THERE IS EVEN A FUTURES ON OTHER CONTRACTS AS WELL AND OVERSEAS MARKETS. YOU ARE ASKING WHETHER IT BE AN OPTION ON THAT FUTURE. IT IS IN OUR FUTURE BUT IN THE NEXT 16 OR 18 MONTHS. ALIX: HOW RELEVANT WILL THAT BE TO HELP FORM REGULATION? WHAT IS THE FEEDBACK LOOP? GARY: TO THE EXTENT THAT INTERNATIONAL REGULATORS CAN ASSURE FOR MORE CONFIDENCE THAT THE VIEWERS OF THIS PROGRAM CAN SAY I AM COMFORTABLE, I CAN DO THIS AND BIG ASSET MANAGERS CAN INVEST, YOU WILL SEE MORE POTENTIAL ADOPTION. THE CORE TECHNOLOGY HAS TO HAVE A PLACE IN RIGHT NOW, IT IS MORE HYPE THAN REALITY. THE TECHNOLOGY IS THREE YEARS, MAYBE FIVE TO 10 YEARS AWAY FROM REALLY BEING ABLE TO BE SCALED. VISA MOVES 25,000 TRANSACTIONS PER SECOND, BITCOIN MOVES SEVEN TO 10 TRANSACTIONS PER SECOND. I THINK SCALING ISSUES WILL COME. DAVID: ASSUMING WE HAVE THE REGULATION YOU DESCRIBE, WHERE SHOULD THAT REGULATION COME FROM? YOU ARE FROM THE CFTC BUT MAYBE THERE IS AN ENTIRELY DIFFERENT REALTOR A BODY. GARY: I WOULD BE REGULARS -- REGULATOR NEUTRAL AS WELL AS TECHNOLOGY NEUTRAL. I THINK OF PURE CASH CRYPTOCURRENCY LIKE BITCOIN NEEDING MORE PROTECTION, MORE THAN EVEN THE OIL MARKETS OR CORN AND WHEAT. I THINK THE CFTC HAS GOOD SKILLS. I THINK CRYPTO ASSETS CALLED INITIAL COIN OFFERINGS, LIKE THE OLD DUCK TEST. THESE THINGS ARE LIKE INITIAL PUBLIC OFFERINGS. ALIX: WHAT DO YOU FEEL LIKE IS THE APPETITE FOR OTHER EXCHANGES, OTHER COUNTRIES LIKE SOUTH KOREA TO REGULATE AS WELL? GARY: YOU SEE A LOT OF COUNTRY SAYING WE HAVE TO GUARD AGAINST ILLICIT ACTIVITY AND ENSURE OUR TAX BASE STAYS STRONG. ALIX: SOUNDS GOOD. GARY: THE REALITY IS IT IS HARD TO IMPLEMENT. IT IS REALLY HARD TO IMPLEMENT. THE INVESTOR PROTECTION SIDE IS ALL OVER THE LOT. SMALL POPULATION COUNTRIES WANT TO ATTRACT AND SAY COME HITHER. THEY WANT THE JOBS, THE CEOS AND IN SOME COUNTRIES LIKE CHINA AND INDIA ARE VERY HESITANT AND OFFICIALLY THEY BAN INITIAL COIN OFFERINGS BUT UNDERNEATH, THE ECONOMY STILL HAS A LOT OF PEOPLE TRADING IN THAT POINT. -- TRADING IN BITCOIN. DAVID: THIS IS REALLY IN THE EARLY GOING. A LOT OF PEOPLE INVOLVED IN BLOCKCHAIN WOULD SAY DON ' T HOLD US BACK. GARY: THEY WOULD. YOU WANT SOME FORM OF REGULATION. YOU WANT TRAFFIC LIGHTS AND SPEED LIMITS BECAUSE THAN THE PUBLIC IS CONFIDENT TO DRIVE ON THE ROADS. I THINK THE TWO CAN COEXIST BUT IT WOULD TAKE A NUMBER OF YEARS TO SORT THROUGH.

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Ex-CFTC Chair Gensler Says Cryptocurrency Needs More Regulation Than Oil

Gary Gensler, former chairman of U.S. Commodity Futures Trading Commission, discusses the rise of blockchain technology and regulation of cryptocurrencies. He speaks on "Bloomberg Daybreak: Americas." (Source: Bloomberg)

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