Bill Clark | CQ Roll Call | Getty Images
Rep. Warren Davidson, R-Ohio
Nearly 50 representatives from U.S. financial giants and cryptocurrency startups are set to meet with Washington lawmakers this week to talk through what some say is an incomplete and murky regulatory landscape.
Bitcoin and other cryptocurrencies are often described as anonymous because people don’t need to give any identifying information to send or receive them. While transactions are recorded on a public ledger, they’re listed under an alphanumeric code known as a “public key,” which doesn’t reveal the trader’s identity.
Legislators have been especially vocal about criminals abusing that anonymity. Rep. Brad Sherman, D-Calif., was among those with a litany of concerns at a House Financial Services subcommittee hearing in March. He and others brought up the potential for terrorist financing and for skirting “know your customer” laws and money transmission standards that exist for state-backed currencies.
Pat Berarducci, a lawyer for blockchain software technology company ConsenSys, said most industry participants want to achieve the same goals as regulators. He compared the fast-paced innovation and the legal uncertainty to the early dot-com years.
“There are a lot of regulators wanting the U.S. to develop ‘do no harm’ policies to allow innovation to grow, just like they did in the internet era,” said Berarducci, who is attending the roundtable Tuesday.
Since bitcoin and other cryptocurrencies are not backed by a government, founders have fewer constraints on where to start their projects. One fear is that if the U.S. cracks down too hard, founders will flock to less restrictive jurisdictions such as Switzerland or Malta.
“Businesses and entrepreneurs are making decisions about where to locate and grow based on regulatory considerations,” Berarducci said. “Policymakers are trying to foster innovation [and] at the same time protect consumers.”
The cryptocurrency market has struggled this year compared with 2017. Bitcoin, the world’s largest cryptocurrency, has fallen by 50 percent since January, and the market capitalization of all cryptocurrency is down by roughly 65 percent, according to data from CoinMarketCap.com.