Federal Regulators Discuss Crypto Regulations
On February 6th, 2018, U.S. federal regulators discussed cryptocurrency regulations with American lawmakers. Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), delivered his testimony to the Senate Banking Committee regarding federal regulatory oversight of crypto-exchanges, ICOs, and the crypto-market in general. As Core Media reported earlier, the SEC has been quite concerned about ICOs. Most crypto-enthusiasts are aware that numerous ICOs have been launched, and many of them have been scams. In fact, Ethereum co-founder Vitalik Buterin and many other prominent members of the crypto-community have issued warnings about ICOs.
While speaking to the Senate, Mr. Clayton stated that the laws regarding selling securities are very clear. He also pointed out that many ICOs had been operating illegally. The federal regulator went on to explain,“When investors are offered and sold securities — which to date ICOs have largely been — they are entitled to the benefits of state and federal securities laws and sellers and other market participants must follow these laws.” Although the SEC chairman was critical of ICOs, he did express his fondness of blockchain technology and thinks it could significantly affect how Wall Street operates in the foreseeable future.
A “Do No Harm” Approach
Meanwhile, J. Christopher Giancarlo, chairman of the U.S. Commodity Futures Trading Commission (CFTC), said that federal regulators must acknowledge that digital currencies could trigger a “paradigm shift”. Therefore, he suggested that authorities should adopt a “do no harm approach”. He also added that there should be an optimal balance of appropriate regulations, policies, and “private sector innovation”. This approach should enable the U.S. crypto-market to grow in a “responsible” manner, according to the federal regulator.
Bruno Wu, Head of Seven Stars Cloud, a company that promotes itself as a “next-generation Artificial Intelligence and Blockchain-Powered Financial Technology Company“, said that he welcomed the comments provided by the federal regulators and other U.S. lawmakers. While discussing the testimonies delivered by the heads of the SEC and CFTC, Mr. Bruno tried to put the current state of cryptocurrencies into perspective. He mentioned that the current size of the cryptocurrency market doesn’t even equal 1% of the traditional financial markets. He also thinks there’s a great opportunity to use the existing infrastructure that has been created by the traditional financial system and upgrade it “into the crypto era”.
Crypto-Market Seems to Recovering
Following the news from the meeting between federal regulators and U.S. lawmakers, the cryptocurrency market seems to be recovering. Bitcoin is up nearly 22% in the last 24 hours while Ethereum and Ripple are up around 30% and 20% respectively (CoinMarketCap). Neeraj Agrawal, Director of Communications at Coin Center, a leading non-profit organization that focuses on policy issues regarding cryptocurrencies, stated that the crypto-community, in general, has reacted fairly positively to the much-anticipated meeting.
Although U.S. federal regulators expressed the need for a more comprehensive regulatory framework for the crypto-market, it should be noted that nobody has all the answers. Moreover, the crypto-market is still very much in its infancy. World leaders and their governments acknowledge that they do not know everything about digital currencies or blockchain. That’s why they’ve put together research teams which are tasked with informing their governments about how cryptocurrencies work. There are also many challenges that crypto-technology still needs to overcome. However, as it develops and matures, it’s possible we might see a marked improvement in its overall efficacy in the next few years.