SEC and CFTC are positive on DLTs and cryptos, But say ICOs are still a worry
Feb 07, 2018 Posted / 4689 Views
The Commodity Futures Trading Commision (CFTC) and US Securities and Exchange (SEC) on the morning of February 6 met in Washington D.C. Senate Building to contemplate on Blockchain, cryptocurrencies and ICOs. The Committee on Banking, Housing and Urban Affairs indulged in an open session for roughly 2 hours and before the hearing, testimonies on behalf of both witnesses were released.
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There were some Pre-testimonies too that was released on February 5, 2018. J. Christopher Giancarlo, chairman and witness of the CFTC, was positive about the impact of the blockchain, cryptocurrencies and in lieu dedicated roughly two pages to describe the potential benefits of these digital technologies to financial services, charities, agriculture and logistics. As an enthusiast analyst would say Giancarlo was quite bullish with his views and seemed to favour the freedoms from DLT (Digital Ledger Technologies) expressing that it is similar to the Internet.
“This simple approach is well-recognized as the enlightened regulatory underpinning of the Internet that brought about such profound changes to human society."
"Internet-based innovations have revolutionized nearly every aspect of American life, from telecommunications to commerce, transportation and research and development. [“Do] no harm” was unquestionably the right approach to the development of the Internet. Similarly, I believe that “do no harm” is the right overarching approach for distributed ledger technology."
However, the chairman expressed worry too at some point and stated that virtual currencies will “likely require more attentive regulatory oversight” in regards to “fraud and manipulation.” But coming till the end he seemed to advance the motives and told SEC and CFTC will do the best for growth in the crypto-space and it obviously gave smiles to the favourers. He said
“As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”
If we talk about Jay Clayton, the chairman of the SEC, he expressed that he is very positive about the affirmative role these currencies can play in the financial system. However, he was somewhat apprehensive about its monitoring and obligations that it might bring.
“To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From a financial regulatory perspective, these developments may enable us to better monitor transactions, holdings and obligations (including credit exposures) and other activities and characteristics of our markets, thereby facilitating our regulatory mission, including, importantly, investor protection.”
However, Clayton had some serious issues with ICOs as it was clear from his testimony as he mentioned about them more than 100 times in mostly in negative light. Clayton acknowledged the recent study findings which said that 10% of all ICO proceeds are lost to hacks and frauds. He mentioned that majority of buyers are unaware of the investment risks and lose money to scams. He also mentioned about Facebook banning the ICO related advertisements was a great move to diminish the scam ICOs.
Nevertheless, he praised the innovations of DLT (Distributed Ledger Technology), which is largely known to the public as “Blockchain”. However, he maintained that he wants some regulations for ICOs. He said
“Simply said, we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising, but not at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets.”
Clayton has stated that he and Giancarlo have “built a strong relationship.” They are prepared to work together and create a robust regulatory framework. There seems to be only a pitch about ICOs, and DLT needs the least regulation. We can apprehend that both the SEC and CFTC seem to encourage and are prepared to elaborate on the matter. It was great to see a positive and refreshing stance by both Giancarlo and Clayton who throughout remained excited about the capabilities of DLT and cryptocurrencies.
It comes out as a bullish development for Crypto lovers and as a result, there was some increase in the prices of Bitcoin and altcoins. (P.S.- Giancarlo feels “HODL” is an acronym for “Hold On for Dear Life.”)
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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