CFTC & SEC TALK CRYPTOCURRENCY & BITCOIN – Regulators Press U.S. Congress For More Regulations
Congress is set to hold what may be the most consequential hearing in years on the subject of cryptocurrency, with the heads of the two main U.S. financial market regulators in the hot seat.
Ahead of the hearing, copies of both Clayton’s and Giancarlo’s testimony have been released. While largely an overview of their respective agencies’ work to date, both leaders suggested that they would support, in some way, new avenues of regulation that could lead to an expansion of oversight by the U.S. government into the cryptocurrency market.
Clayton commented in his written remarks that he is “open” to working with U.S. lawmakers, in addition to state regulators, on the question of new rules for trading sites.
“As Chairman Giancarlo and I stated recently, we are open to exploring with , as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space.”
Giancarlo’s nudging toward possible changes was slightly more detailed, highlighting what he called “shortcomings” in the system by which each state issues money transmission licenses to businesses.
“As the Senate Banking Committee, the Senate Agriculture Committee and other Congressional policy-makers consider the current state of regulatory oversight of cash or ‘spot’ transactions in virtual currencies and trading platforms, consideration should be given to shortcomings of the current approach of state-by-state money transmitter licensure that leaves gaps in protection for virtual currency traders and investors,” he wrote.
What kind of event can industry-watchers expect?
Another issue that may come up in the hearing is the regulatory treatment of token sales, particularly when the token being sold to raise funds for a project ICO is supposed to be useful on the network that will eventually be built.
Lewis Cohen, a partner at the law firm of Hogan Lovells in New York, said he agreed with Clayton’s comment in the prepared remarks that ICOs should be regulated as securities when they emphasize the potential for investor profits (for example, from selling tokens in the secondary market). Just because the tokens may have utility does not exempt the offering from investor protections.
But likewise, he said, the regulatory community needs to be careful not to assume that just because a token is the object of an investment scheme that it is necessarily a security itself.
It would “make little sense,” Cohen said, if once a functional network like Filecoin is fully up and running its users had to go to a broker-dealer to buy tokens to store data in a decentralized manner on the platform. Bitcoin recovered from three-month lows below $6,000 in choppy trading on Tuesday, but worries lingered about a global regulatory clampdown and moves by banks toInvestors swooped in after a steep fall. On the Luxembourg-based Bitstamp exchange, bitcoin hit $5,920, its lowest since mid-November, before recovering to above $7,000 BTC=BTSP. It was last at $7,260 in late morning trading in New York, up roughly 6 percent on the day.
“The recent weakness in bitcoin stems from tightening liquidity and near-term profit taking, and does not reflect a change in the long-term outlook for the digital Bitcoin Crypto Cryptocurrency 2018 U.S. “Invest in Bitcoin” America ICO Regulation Futures “Bitcoin Trading” “Bitcoin Futures” Litecoin Litepay “Wall Street” Markets Trading “Stock Market” Stocks Meeting Conference Tech Technology Finance Wealth Wealthy “Financial Freedom” Rich leader leadership Savings Plans Asset Commodity “Trading Platform” Ethereum Mining jp morgan currency,” said John Sarson, managing partner at Blockchain Momentum LP and ETF Momentum Investing in Indianapolis.
“We view this selloff positively as we believe that lower prices will entice institutions to act quickly to adopt enhanced digital asset services before prices recover.”
Bitcoin has slumped in recent sessions as a risk-off mood spread across financial markets. It has fallen about 70 percent from its peak of almost $20,000 in December and was down nearly 50 percent so far this year.
The original cryptocurrency gained more than 1,300 percent last year.
Other digital currencies also rose after posting steep losses the last few weeks. Ethereum, the second-largest by market value, was up 1.8 percent over the past 24 hours at $751.48, while the third-largest, Ripple, edged up 0.5 percent at 73 U.S. cents, according to cyrptocurrency tracker coinmarketcap.com. buying bitcoin with credit cards.
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