The US Senate Committee heard testimony from the chairman of the Commodity Futures Trading Commission (CFTC), Christopher Giancarlo, and the chairman of the Securities and Exchange Commission (SEC), Jay Clayton, on the possible risks of digital currencies as investments. Their testimony, in the middle of a crackdown on Bitcoin exchanges in China, wasn’t as negative as many cryptocurrency investors had feared.
Broadly anticipated due to its positioning amidst what has been one of the major industry bubbles, the heads of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) testify on a series of subjects including marketplace oversight, price instability and the regulatory concerns around initial coin offerings (ICOs) and cryptocurrencies.
“We owe it to this new generation to respect their eagerness for virtual currencies, with a considerate and balanced response, and not a rude one. “It’s important to remember that if there were no Bitcoin, there would be no distributed ledger technology,” said Giancarlo when asked about the value of Bitcoin and the underlying technology, Blockchain
However, it was possibly the measured and complicated nature of the conversation that most observers stood out to uncertainty.
Crypto Industry Reaction to Senate Hearing
Stephen Palley is a Washington, D.C. based lawyer in Anderson Kill. He stated that he was impressed at the level of knowledge displayed by both the committee members as well as the regulators themselves about such an apparently obscure subject cryptocurrency.
Palley Stated:
“It is amazing that nine years after the Satoshi’s white paper, you’ve got senators talking about the cryptocurrencies.”
Attorney Zoe Dolan struck a positive tone in the wake of the hearing as well, taking to Twitter to mark that “this hearing has made me so bullish I can hardly stand up for it.”
She stated
“As a lawyer & a criminal defense lawyer, in particular, I was heartened to hear that the existing laws suffice to address age-old human conduct,” she later said: “Fraud is fraud.”
Berger Singerman LLP associate Andrew Hinkes also highlighted the access from both the agencies that there is a requirement of additional resources to keep an eye on a rapidly-expanding business.
He stated:
“Although this may stoke fear in the community, more resources may lead to better, more considerate and more facilitative guideline. Regulation is helpful when it provides useful guidance.”
Transparency Required
Optimism aside, some marketplace viewers stated that they believe the hearing disclosed the need for extra clarity from the regulatory front, something that both agencies indicated may be essential that raised possible action from the U.S. Congress.
Reading between the lines of Clayton’s comments, Carol van Cleef, a veteran Washington banking lawyer, stated a key takeaway was the “need for clearer regulatory lines.And though he made a point that the SEC is coordinating with the CFTC and Federal Reserve, Clayton “kept talking about the patchwork system.”
The subtext, she said is that “somebody has to take control of this at the federal level.”
This could be challenging for businesses, such as bitcoin exchanges, that have spent its last few years building compliance programs under the frame of money services business listed with FinCEN and money transmitters licensed by the states.
Others who took in Tuesday’s hearing highlighted an additional reason for commemoration: that both legislators and supervisory body seemed to agree that cryptocurrencies are here to stay, threats aside. This opinion was articulated by several senators in attendance as well.
Coin Center executive director Jerry Brito gave the statement during the hearing:
“Senators and regulators are surely concerned about deceptive and unstable markets in cryptocurrency, but it was apparent from today’s hearing that they also realize that it may be as transformational as mobile telephony as Senator Warner suggested”
What Arrives Next
One of the noticeable questions remaining in the wake of the hearing is what activities both from Congress and the supervisory body are to come.
In fact, while Clayton himself commented that the agencies may move towards policy-makers asking for wider powers or extra sophisticated oversight tools, Congress could take the first step on its personal level. Van Cleef said she was struck by the way Clayton “made it apparent that the lawyers, gatekeepers, and accountant are subject to SEC jurisdiction.”
Ricky Makan is a venture capitalist and Crypto Enthusiast best known for pioneering the market for Digital Marketing. He is a Co-founder of Unkrypted, a platform which provides the latest news and information that helps understand everything about the ever-evolving world of digital currencies.