By Frances Yue
Gary Gensler, chairman of the U.S. Securities and Exchange Commission, suggested college students “start saving early, save often” in a Wednesday video on Twitter.
“If you were to save $5 a week, and you earn maybe 8%. Starting off while you’re at college, you may have $130,000 plus saved by the time of retirement at 65,” Gensler said in the video. “But instead if you waited until let’s say you’re 40 years old to start saving, to get to the same numbers, you’d need about $30 a week.”
Though the video’s main point was to encourage savings, the example provided by Gensler drew some backlash on Twitter, notably from the crypto community, as most “high yield” savings accounts in U.S. dollars offer annual percentage yields closer to 0.6% or less, according to Bankrate. (Over the past 45 years, the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.03% ‘s annualized return was about 7.9%, with dividends reinvested and adjusted for inflation.)
Meanwhile, the SEC has repeatedly warned about the risks of crypto lending products that offer much meatier yields than savings accounts in U.S. dollars, and urged such products to be registered as securities.
Nasdaq-listed crypto exchange Coinbase /zigman2/quotes/225893452/composite COIN -4.46% recently dropped its plan to launch a crypto lending program , after the company said it received a lawsuit threat from the SEC. The program intended to allow customers a way to earn interest of around 4% APY by lending their holdings of Circle’s stablecoin USDC, a cryptocurrency pegged 1:1 to U.S. dollars, to Coinbase.
The SEC didn’t respond to a request for comment for this article.
“I’m sure lots of people would’ve loved to have taken advantage of Coinbase’s Lend product in order to earn a decent 4% yield on their savings,” crypto user “sassal.eth” commented on Gensler’s video on Twitter. “But now they can’t because you ‘protected’ them from it.”
“It’s a pity that all the good investments for savings are being put out of reach by SEC regulation,” crypto analyst Willy Woo wrote.
Alex Mashinsky, founder and CEO of crypto lending platform Celsius Network, also responded to the video. “I totally agree. Go ahead and start saving as early as you can.”
Regulators in three states including Texas, New Jersey and Alabama have taken actions against Celsius, accusing the company of offering unregistered securities.