Former Commodity Futures Trading Commission Chairman Gary Gensler said Monday strict regulation of the cryptocurrency market was needed to ensure investor protection. He also spoke about the potential benefits about blockchain technology in an interview with Bloomberg.

Speaking about the need for regulation, Gensler said: "If it [cryptocurrencies or blockchain] gets broad adoption, we really think the crypto world will be part of the future, it needs to come inside the public policy."

The former CFTC chairman emphasized the predominant reason for regulating this market was to protect investors and guard them (and the market) against illegal activity. Protecting investors was essential as it brought confidence into the market and drove more people to participate in it.

"The crypto exchanges, big exchanges like Coinbase need to really come within the SEC or CFTC... to protect the investors," Gensler — who served as the 11th chairman of the CFTC from May 2009, to January 2014 — said.

While outlining the validity of blockchain technology that powers cryptocurrencies, Gensler pointed out its characteristics — like data movement and decentralization — because of which it "has real chance to be a catalyst in the world of finance." Gensler also noted that he taught blockchain technology at MIT, where the "class is crowded. A lot of people want to know about this technology."

Commenting on whether there was a need to regulate blockchain technology itself, Gensler said only specific applications of the technology should be regulated to make sure investors were protected against fraud and manipulation.

"We should be technology neutral to promote innovation, not regulate the blockchain technology," he said in the interview.

Gensler refused to take a stance on which entity should regulate the cryptocurrency market, only saying: "I will be regulator neutral. I think the pure cash cryptocurrencies like bitcoin need more protection and frankly even more protection than the oil, corn, or weed market. Whether that's the CFTC or the SEC, I will be neutral. I think the CFTC has good skills."

Former Commodity Futures Commission Chairman Gary Gensler says cryptocurrencies need regulation to protect investors. Here, a visual representation of the digital cryptocurrency bitcoin alongside a selection of fiat currencies in London, Dec. 7, 2017. Dan Kitwood/Getty Images

On the subject of a futures or options market for cryptocurrencies, the former CFTC regulator referred to bitcoin futures and ether — ethereum cryptocurrency token — futures contract that already exist. In terms of regulating these instruments of trade, he said assurance from international regulators would provide more confidence to the market, following which potential investors could say "'I am comfortable I can do this.' [When] The big asset managers invest [in cryptocurrency futures] you will see more potential adoption."

Blockchain technology, according to Gensler, is more hype than reality at present. Adoption of the technology, even by its largest users, is still quite small and the technology itself is probably 5-10 years away from being able to scale up sizably.

"Visa moves 25,000 transactions a second and bitcoin moves 7 to 10 transactions a second. I am an optimist, I think the scaling issues will come," he told Bloomberg.

When asked if somebody in the federal government actually understood the technology enough to know whether a fraud was committed or to track it, he said it was a challenge. He compared this scenario to that of the internet when it began becoming popular in the 1990s.