A Congressional hearing on the subject of cryptocurrency regulation attracted tens of industry representatives, who all expressed a strong desire for regulation.
The hearing was hosted by a Republican politician called Warren Davidson, of Ohio, who intends to introduce a bill to regulate initial coin offerings with a “light touch” in autumn of this year.
“Your input is critical”
The official title of the hearing was ‘Legislating Certainty for Cryptocurrencies’.
Davidson invited the representatives with the words: “Your input is critical to helping us preempt a heavy-handed regulatory approach that could stall innovation and kill the U.S. ICO market.”
Among those in attendance were representatives from Fidelity Investments, Nasdaq, Kraken, CoinList, Coinbase, Consensys, and Ripple.
“Can we have a basic definition of what’s decentralised enough?”
Ryan Singer of the Chia Network said that his company is going public before launching, overcoming uncertainty by “giving [the Securities and Exchange Commission] a thing they know how to regulate’, a process which has been expensive and difficult”.
Marco Santori of wallet provider Blockchain said: “The SAFT is a symptom of regulatory uncertainty. It is not the best we can do – it was the best we could do, under current law.” A SAFT, or Simple Agreement for Future Tokens, is an investment contract between cryptocurrency ventures and investors. It is defined as a security.
A project called Filecoin sold $200 million in SAFT agreements in 2017 but insisted that its token was a utility. Several attendees referred to the ‘Filecoin dilemma’.
David Taub of law firm McDermott Will and Emery said: “In our experience with clients we’ve worked with in this space…for their platforms to be useful, the tokens on their platforms need to be freely transferable, and for them to be freely transferable they need not be securities, and so fundamentally I think we would benefit from a clear definition of functionality.”
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Mike Lempres of Coinbase said: “We all want fair and orderly markets, we want all the same things regulators do. It doesn’t have to be done in the same way it was done in the past, and we need to be open to that.”
“This isn’t the Wild West”
A representative from the US Chamber of Commerce said that she wished that there were 400 hundred other congressmen in the hearing: “What keeps coming up in my mind is that this isn’t the Wild West, this is a lot of people trying to figure out how to comply, and I think this is the challenge that we don’t hear about in the media.”
David Forman, of Fidelity Investments, said: “If the rules are unclear, unwritten, or unknown it’s not appropriate to punish people for making the wrong guess.”
Arron Wright of the Cardozo blockchain project said: “What can qualify as a token is exceptionally broad and what we’re seeing today is really just the first glimmer of what many entrepreneurs are dreaming about…a world where more and more assets are represented as tokens.”
Cryptocurrency petitions the government
Earlier this week, one Congressman (Tom Emmer) introduced three bills designed to facilitate the adoption of blockchain technology in that country by creating a friendlier atmosphere.
He proposed a “simple legal environment”, in which the country’s tax authority would not be able to tax cryptocurrency generated as a result of a hard fork of a blockchain, and that cryptocurrency mining companies would not need to register as money transmitters.
The first congressional hearing on the subject of cryptocurrency regulation was held in February 2018. This meeting involved representatives asking the heads of the two main US regulatory bodies to explain to them what cryptocurrency is.
The second hearing on this subject was held in July, and had a similar feel to the most recent one, in that it involved industry representatives urging Members of Congress to sort out a legal framework for their businesses.
In June, a number of representatives tried to persuade the British government to write some new laws too.