Crypto needs regulation, but doesn’t need new rules
BITCOIN ENCOURAGES $ 36,000 BRAND OVER NIGHT IN VOLATILE TRADE Treasury Secretary Janet Yellen has suggested the US framework is “falling short” of cryptocurrency regulation. The Comptroller of the Currency, Michael J. Hsu, noted the limitations inherent in a “fragmented agency-by-agency approach,” and Chairman Gary Gensler of the Securities and Exchange Commission lamented that, because cryptocurrency exchanges do not ‘have no market regulator, there is “no protection against fraud or manipulation. Others have called for a ban on cryptocurrencies.
Innovation is rarely fluid or predictable. With a digital revolution underway in the financial services industry, a sector of the economy where the thirst for innovation and profit can never be quenched, there is also a serious risk of over-regulation and under-regulation. Policymakers would do well to base their efforts on the main objectives underlying existing financial regulations: financial stability, deep and efficient funding markets across the debt and equity spectrum, and the prevention of debt and equity. fraud and illicit activities. Many new digital technologies are designed to perform other well-understood financial activities, including payments and record keeping. Regulators have overseen these functions for decades and have a deep understanding of their importance and how they work in our financial ecosystem.
DISCOVER FOX BUSINESS BY CLICKING HERE Existing regulatory frameworks provide the tools to address many of the risks of new technologies without stifling their promise. If the application of these frameworks reveals outdated requirements, such as a mandate to use paper documents or other outdated technology, including for government functions such as mortgage and collateral registration, regulators should delete them. If a coordinated analysis by national and international authorities reveals a regulatory gap, it must be addressed. But we shouldn’t start by assuming that there is a need to reinvent the regulatory regime.
Crypto entrepreneurs looking for capital have touted Initial Coin Offerings, or ICOs, as an efficient new (read unregulated) way to raise money for businesses. Yet their function was neither new nor unregulated. In function, ICOs were offerings of securities, and in 2017 the SEC rightly stepped in to regulate them in accordance with well-understood and long-standing federal securities laws. The keystone of this approach is to identify the functions that a new product or process performs. We should look beyond the superficial labels and ask ourselves how a token, digital wallet, cryptocurrency or crypto exchange is used and with what existing instrument or process the new technology competes, complements, or aims to replace, then adjust it accordingly.
ASSET: BITCOIN IS A SCAM, THE US DOLLAR SHOULD DOMINATE As a historical example, “bearer bonds” are illuminating. These instruments provided for the payment of cash to the cardholder upon presentation to the issuer outside banking and brokerage systems, providing fertile ground for money laundering, tax evasion and corruption. Regulatory coordination between the Treasury, Federal Reserve, SEC, and their international counterparts has largely ended this market without harming the corporate bond market, which has flourished over the past decades. The same approach can be applied to new instruments with similar risks, such as transferring bitcoin using an anonymous wallet.
First, which regulators will regulate what types of digital assets and financial technologies? Roles and jurisdictions will overlap, as is currently the case when, for example, securities held in a brokerage account are used to facilitate an international payment where the SEC, Fed, and Treasury have a variety of important interests. But clarity would make markets more efficient while discouraging efforts to circumvent regulation. These efforts are not yet sufficiently coordinated or proactive to meet the challenge. Financial regulators and economic decision-makers must define an agreed plan to deal with the digitalization of financial assets and technologies, based on the current regulatory framework. This effort should address at least three pressing issues: The efforts of policymakers to address issues concerning the future of money, payments and credit are at various stages of maturity. The Federal Reserve is studying the desirability and feasibility of issuing a digital dollar. A bill pending in Congress would direct the SEC and the Commodity Futures Trading Commission to collaborate on cryptocurrency regulation.
News Business Highlights
- Crypto needs regulation, but doesn’t need new rules
- Check out all the news and articles for business news updates.
Disclaimer: If you need to update / edit / delete this news or article, please contact our support team.