Crypto industry leaders warn Congress: Figure out regulation, or watch innovation leave the US

The U.S. Capitol.

Tom Williams | CQ Roll Call| Getty Images

The U.S. Capitol.

The cryptocurrency industry has a plea for Congress: Hurry up and regulate, please.

In the meantime, the group told stories of companies scrambling to interpret whether their initial coin offerings, or ICOs, are compliant. Because some have a “utility” use case, founders argued they should be exempt from securities laws, and instead be considered a commodity regulated by the CFTC. The SEC still treats all initial coin offerings, except for ethereum and bitcoin, as securities.

Panelists mentioned a “chilling effect” that uncertainty can have on U.S. innovation if companies are afraid of misinterpreting laws.

“If the rules are unclear, unwritten, or unknown it’s not appropriate to punish people for making the wrong guess,” said David Forman, chief legal officer at Fidelity Investments.

The SEC has cracked down on those who made moves it deemed wrong. Consumer protection has been a focus for the agency and while some ICOs have been proven to be outright frauds, others have been prosecuted for less egregious violations, like not registering with the agency.

Global exodus

Since bitcoin and other cryptocurrencies are not backed by a government, founders have fewer constraints on where to start their projects. One fear that at least half of attendees mentioned is that if the U.S. cracks down too hard, or fails to give clarity, founders will flock to more crypto-friendly jurisdictions overseas.

“The competition around the world is real. But there is still time and opportunity for the U.S. to be a leader here,” said Joyce Lai, a lawyer at blockchain software technology company Consensys, which she said now employs more than 1,000 people globally.

Cryptocurrencies have already raised a record $12 billion so far this year, according to data firm Autonomous Next. Jesse Powell, co-founder and CEO of crypto exchange Kraken, highlighted the advantage of being able to freely raise capital.

“Foreign companies are able to outraise their U.S. competitors and often whoever raises the most money is who wins,” Powell said. “Not only are U.S. companies not able to raise enough to compete globally, U.S. investors are not able to invest in these global companies.”

Reaching across the aisle

Despite four hours of discussions, a cryptocurrency bill from Congress is “not a cooked thing,” Davidson said. Tuesday’s panel was mostly for listening to the industry about what to include before it’s drafted and introduced, the congressman said. Still, he said moving quickly was “imperative.”

“Legitimate players in the industry have a desire for some sort of certainty so we can prevent and prosecute fraud,” Davidson said. “I’m confident we can move forward and make this a flourishing market in the U.S. It’s an imperative for us to do, we did it well with the internet.”

A few panelists were emboldened by the possibility of the bipartisan effort behind crypto. Reps. Ted Budd, R-N.C., Tom Emmer, R-Minn., and Darren Soto, D-Fla were among the Congressional representatives attending the hearing.

“We need to get moving on this now, there’s no time for delay,” said Emmer, who has introduced multiple blockchain bills to Congress. Blockchain is the technology that underpins cryptocurrencies, and is being applied to everything from storing health care records, to tracking vegetables that carry E. coli.

Soto agreed with his Republican colleagues, but went even further, suggesting that Congress may need to throw out the current playbook for cryptocurrency.

“I’m sensing we may need an entirely new category that treats this like a new asset, so that we’re not trying to squeeze a square peg into a round hole,” Soto said. “There needs to be some streamlining based on the definitions of digital assets.”

Read More

Did you like this?
Tip Cryptos UK with Cryptocurrency

Donate Bitcoin to Cryptos UK

Scan to Donate Bitcoin to Cryptos UK
Scan the QR code or copy the address below into your wallet to send some bitcoin:

Donate Bitcoin Cash to Cryptos UK

Scan to Donate Bitcoin Cash to Cryptos UK
Scan the QR code or copy the address below into your wallet to send bitcoin:

Donate Ethereum to Cryptos UK

Scan to Donate Ethereum to Cryptos UK
Scan the QR code or copy the address below into your wallet to send some Ether:

Donate Litecoin to Cryptos UK

Scan to Donate Litecoin to Cryptos UK
Scan the QR code or copy the address below into your wallet to send some Litecoin:

Donate Monero to Cryptos UK

Scan to Donate Monero to Cryptos UK
Scan the QR code or copy the address below into your wallet to send some Monero:

Donate ZCash to Cryptos UK

Scan to Donate ZCash to Cryptos UK
Scan the QR code or copy the address below into your wallet to send some ZCash:

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.