by Joel Schlosberg
Commission Chair Gary Gensler might seem one of the least likely people in the world to praise Bitcoin as an example of "how technology can expand access to finance and contribute to economic growth" -- while noting its founder Satoshi Nakamoto's intentions "to create a private form of money with no central intermediary, such as a central bank or commercial banks" ("Remarks Before the Aspen Security Forum," August 3).
Yet while Gensler praises the technological breakthroughs of Bitcoin and other cryptocurrencies, he evaluates them from the existing framework of money issued by governments, contending that "we already live in an age of digital public monies -- the dollar, euro, sterling, yen, yuan" since they circulate in forms less tangible than printed bills. With exchanges between different forms of cryptocurrencies at present largely relying on "stable value coins ... pegged or linked to the value of fiat currencies," it seems natural to Gensler to bring them under the SEC's established regulatory structure.
Yet as Benjamin R. Tucker noted in 1887, allowing only forms of banking that "observe the prescribed conditions" of "law-created and law-protected monopolies" prevents them from becoming a true alternative.
One such experiment, Ralph Borsodi's Constant, was stalled in 1974 by the prospect of the same SEC securities regulation proposed by Gensler for current private currencies. The Constant secured against the inflation which steadily diminishes the purchasing power of state currencies by being based directly on the real supply and demand values for a representative sample of common goods. Borsodi had correctly presumed that even though the Constant had achieved his aim, since it "takes money creation completely out of the government's hands," it was "not likely to make governments very happy."
Gensler warns that cryptocurrencies are "rife with fraud, scams, and abuse in certain applications." Mutualists like Tucker and Borsodi saw how political influence over the currency, implemented via seemingly neutral rules, inevitably consolidated economic clout by stealthily rigging the whole economy to favor the powerful. A free market in money itself, not just in what can be traded for money, would keep its providers honest and its value fair.
New Yorker Joel Schlosberg is a contributing editor at The William Lloyd Garrison Center for Libertarian Advocacy Journalism.
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