All Powerful U.S. Struggles to Reach a Consensus over Crypto Regulations

February 21, 2018

U.S. policy makers have found themselves trying to catch up on how to regulate one of the fastest growing in popularity investments to hit the finance world in ages – cryptocurrencies.

In the most powerful country in the world, policymakers seem all over the place in trying to figure out how to handle the new-fangled, but growing in popularity, cryptocurrency.

Whether it is states passing their own legislation regarding cryptos, or federal regulators trying to root out bad actors, there is no clear guidance on how the crypto space will be handled in the U.S. The need for clarification became even clearer over the past few days.

The White House relayed that it is not even close to regulating Bitcoin, while members of both chambers of Congress indicated that momentum is growing to put something firm in place to protect investors and the country’s financial system.

Here, we’ll go over the conundrums at play over cryptos in the U.S.

Much work to do

U.S. officials are not just grappling with how to regulate cryptos like Bitcoin. They are also trying to figure out just which agency has jurisdiction over the space.

We told you Monday about the White House’s cybersecurity coordinator, Rob Joyce, saying to CNBC that the U.S. government still has a long way to go before it even starts to draft crypto  regulations.

This is a problem because when criminal acts related to cryptos are found, it’s difficult to shut them down.

To CNBC, Joyce said:

“I think we’re still absolutely studying and understanding what the good ideas and bad ideas in that space are. So, I don’t think it’s close.”

Congressional leaders have plenty to say, but draft no laws

While the White House official was telling CNBC about the executive branch’s views on cryptos, members of Congress were telling Reuters something slightly different. Many members conveyed that they saw an immediate need for regulations. As noted above, they don’t want investors to be hurt, nor do they want to see the financial system disrupted by cryptos and bad actors.

Reuters noted that much of lawmakers’ concerns focused on speculative trading and investing in cryptocurrencies. This has led some of them to push for digital assets to be regulated as securities and subject to the U.S. Securities and Exchange Commission’s investor protection rules, the media outlet reported.

Many lawmakers remain unsure about which government agency has jurisdiction when it comes to cryptos because of the myriad regulators taking action. In addition to the SEC, there is also the U.S. Commodities Futures Commission, the Treasury Department, and the Federal Reserve.

At the state level, securities’ regulators have punished crypto wrongdoers. Take Texas, for example. Its State Securities Board has taken down several crypto outfits it found to be fraudulent, including the infamous DavorCoin.

What lawmakers are saying

Here are a few of the comments Congress members made to Reuters.

House Financial Services Committee member Tom MacArthur:

 “We have to look carefully at all of the cryptocurrencies and make sure individuals don’t get taken advantage of.”

In addressing the jurisdiction matter, Senator Mike Rounds told Reuters that there was an opportunity to regulate cryptocurrencies as both a security and a commodity.

But while lawmakers are keen to mitigate the risks digital assets may pose, they are also mindful of the need to protect innovation, including the underlying distributed ledger technology called Blockchain

Senator Chris Van Hollen, a member of the Senate Banking Committee, said one thing that they all seem to agree on:

“The goal here is to have rules of the road that protect consumers without trying to squash innovation.”

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