Results of the US Congress hearings on the crypto industry

4 Months ago / Articles

 

Preface

The issue of the crypto-industry regulation is still open in many countries around the world. And if in some countries the legislation in this area is already in full operation, other governments of the world still do not fully understand what Bitcoin is, for example. On July 18, the US Congress held hearings on the crypto industry. One was carried out by the US Senate Committee on Agriculture, and the other – by the Committee on Financial Services of the House of Representatives.

The approaches during the discussion appeared to be diametrically opposite: some were very positive when speaking about the crypto-industry, while the other reflected all prejudices and conservative views.

Positive attitude towards cryptocurrency and desire to understand all the intricacies of the industry was demonstrated on the first hearings since the very beginning.

  • "This hearing will shed light on the digital assets and regulatory challenges which is this new class of assets facing. Our committee takes a deep interest in promoting strong markets for products of all types, including the new technologies, - said prior to the hearing in the Committee on Agriculture the Chairman of the Republican Party of the 11th congressional district of Texas, Michael Konavay. - We are interested in the establishment of security, since it directly affects the product."
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Can the regulation of cryptocurrency be volatile?

Primarily, there was raised the question of giving the definition to Bitcoin at the meeting. At the moment, various US agencies have different views on the crypto industry. If the Securities and Exchange Commission (SEC) considers cryptocurrency as securities, then the Futures Trading Commission (CFTC) has to consider them as goods.

Therefore, during the hearing, it was suggested to provide digital tokens with a special, "fluid" legal status. During the ICO, it can become an "investment agreement", thus falling under control of the SEC.

Then, after you start using them in blockchain, they can become relevant to the CFTC having changed its legal status and economic meaning. This innovation can help with ethers definition. The fact that, according to some rumors, last year's token has been classified as "safe". However, this generates a paradox, because if this is true, the ICO conducted several years ago will be considered illegal.

 

What about the crime?

According to the managing partner of Andreessen Horowitz private US venture capital company, Scott Kupora, Bitcoin – is the best friend of law enforcement agencies, because one way or another, even anonymous transaction can still be traced.

  • "Bitcoin, in fact, is the worst tool for money laundering, since each transaction is registered and recorded," - he explained. 

The audience and the speakers touched the topic of blockchain influence on the modern world. So, according to the senior lecturer at the MIT Sloan School of Management, Gary Gensler, decentralization is not really a problem for most users, but, as he said, it looks pretty ironic that the basic technology has remained decentralized, while the rest of the industry is concentrated in the hands of a few large centralized exchange platforms. Daniel Gorfin from LabCFTC stressed that although the crypto industry allows peer transactions, the majority of the transaction types are carried out through a new type of intermediary, where there might come into play AML and KYC.

  • "As long as stupid criminals continue to use Bitcoin, it will be just great", - expressed a similar thought Conway.

On the other hand, not all those sitting in the hall were so well disposed towards digital currencies. Some, apparently, did not fully understand the basic concept of crypto industry.

  • "So, they just print money out of nowhere?" - exclaimed Republican Congressman, Colin Peterson, continuing a standard and a long-standing story of Bitcoin and Ponzi scheme. 

However, the former chairman of the CFTC, Gary Gensler, immediately objected to him, reminding the evolution of money:

  • "There's really no gold behind the bitcoin. Behind it there is a cultural norm, therefore bitcoin is a modern form of digital gold. This is a social construction."

In general, a hearing took place in a fairly optimistic vein. Many of the participants came to the conclusion that the industry needs to "soft regulation", but this should be done very carefully, by all possible means trying to avoid shock situations.