The Chairman of the Securities and Exchange Commission, Jay Clayton, and the Chairman of the Commodity Futures Trading Commission, Christopher Giancarlo, discussed the possible regulations that can be implemented on cryptocurrency. The hearing defined the terms commonly used in the virtual currency ecosystem. Cryptocurrencies were defined as dollar replacements. An ICO or initial coin exchange was compared to a stock offering, while distributed ledger technologies was generally described as blockchain.
Clayton’s concern was on ICO fraud while Giancarlo expressed enthusiastic interest about the emerging digital market. Giancarlo explained the mining process and its relationship with price. However, Clayton declared his doubts on cryptocurrency’s usefulness. He also cited the inherent volatility of the digital market and how such an environment has the tendency to make cryptocurrency transactions difficult. Both of the chairmen have issues with cryptocurrency’s unregulated nature as well as the likelihood of its users to believe that they are protected from fraud.
Giancarlo explained, “To be clear, the CFTC does not regulate the dozens of virtual currency trading platforms here and abroad.” He described how CFTC does not have the authority to place safeguards in the digital currency platform or offer cyber protection in the same way it does traditional securities. Meanwhile, Clayton is requesting federal regulators, the SEC, and CFTC to have a state-coordinated plan to respond to consumers’ inexperience with trading unregulated platforms.
Senator Mark Warner, who has relatively more knowledge on cryptocurrencies than his contemporaries, is demanding for more ‘coordination’ among regulatory bodies as doing so would produce a more flourishing future for cryptocurrencies. He stated, “The potential writ large amongst crypto assets and the underlying blockchain could be as transformational as wireless was years ago. I think we’re going to need a much more coordinated effort.”