18. July proved to be a crucial day for the crypto industry, as two separate hearings of the U.S. Congress were held, in which the matter was in the focus: the House Agriculture Committee and the other from the House Financial Services Committee.
The two strokes are completely different tones: While the latter seemed the most conservative feelings about the crypto area (with the somewhat obligatory demand for a flat ban) reflected, to be the first positive, because the expert panel provided the Supervisory authorities, with the collected Considerations, the harassment of the industry. Nevertheless, it is the House Agriculture Committee, on which we should focus our attention.
The panel consisted of six industry representatives and academics:
Joshua Fairfield. Legal and technology researchers specializing in digital ownership, electronic contracts, privacy, and virtual communities. William Donald Bain family Professor of law.
Amber. Co-founder and CEO of the Clovyr Startups, which acts Essentially as a decentralized App Store. Formerly head of the Blockchain Center of Excellence (BCOE) of JPMorgan Chase.
Scott Kupor. Managing Partner at Andreessen Horowitz, a private American Venture Capital company.
Daniel Gorfine. Director of LabCFTC, a branch of the Commodity Futures Trading Commission (CFTC), which aims to promote “responsible FinTech Innovation”.
Gary Gensler. A lecturer at the mit Sloan School of Management. Predecessor of Christopher Giancarlo, the current CFTC Chairman (also known as “crypto, dad”). Former Co-head of the financial Department at Goldman Sachs.
Lowell Ness. Managing Partner at Perkins Coie LLP, an international law firm.
“vested interest” of the Congress in crypto: opening statement
the hearing of The House Agriculture Committee with the title: “crypto-currencies: supervision of new assets in the digital age” was made by the Chairman Michael Conaway, a Republican representative of the 11th. Congress district of Texas, passed. Before the hearing, he made the following statement:
“This hearing will illuminate the promise of digital Assets and the regulatory challenges that this new facility is class. Our Committee is keen to promote strong markets for raw materials of all kinds, including those arising from new technologies.”
So Conaway has been set from the beginning, a fairly positive attitude towards crypto, which explained why the House Agriculture Committee, could be at all curious on the topic of:
“[We] have a personal interest in making the Definition of a security, and to construct, because it has a direct impact on the Definition of a commodity.”
the Following are the main points and arguments in the hearing are listed.
The regulatory Status of the Digital Asset could be fluent in
The two present scientists, Gensler, and Fairfield, may be busy with the main issue of concern to US regulators: Bitcoin? Currently, a number of US authorities digital assets to consider in different ways: For example, the Securities and Exchange Commission (SEC) as securities, while the Commodity Futures Trading Commission (CFTC) considers them as raw materials.
Now the witnesses have suggested that the legal Status of the digital Tokens is actually fluent in: If it is marketed to a “präfunktionalen” Moment in its development – so during a Initial Coin Offerings (ICO) – the sale in this Moment is an investment contract and thus a security, the verified in of the SEC area of law. the
If crypto will be realized in Token and in a decentralised network, it is a product for the CFTC to be relevant. This could include the Ethereum Dilemma: last spring it was rumored that the Token was classified as a security. however, would be considered in this case, the ICO, which took place years earlier, as illegal (because it was not registered with the SEC), and therefore, the entire asset would be compromised, a scenario that Gensler for the industry as dangerous to his life.
The former CFTC Chairman then suggested that the current state of Cash-to-crypto markets “in the best case, resembles a wild West” and that the CFTC may need more authority and resources to cope with the challenge. SEC might need 2-4 years, to deal with the “Thousands” of “non-compliant” players in the ICO room, he argued.
Fairfield expressed a similar view and suggested that the 70-year-old Howey Test, the SEC applied for the determination of the scope of their Jurisdiction, the case should be dropped:
“Should be considered Tokens according to the Howey Test? I think we should look after the outer border, to find out what are the advantages and damage to the technology. Look at how the Communities use them – and then regulate.”
The firm Ness of Perkins Coie was with the statement that an aggressive expansion of the value of paper classification could disrupt the crypto space seriously, and it has developed to allow transfers of Value “with the speed of Software”.
“Bitcoin is the best friend of law enforcement”
expressed As members of the Committee their concerns regarding the participation of crypto in illegal activities, argued Kupor of Andreessen Horowitz, that “Bitcoin is the best friend of the law-enforcement authorities”, as pseudonymous transactions can ultimately be using smart Tools to analyze the Blockchain trade pursued for its transparency.
“Bitcoin is actually the worst Tool for money launderers, because each transaction is registered and the [recorded]”
In a similar way, remembered Ness to the fact that “the alleged Russian hackers get caught, because you will Bitcoin use”, in relation to the recent indictment, the twelve Russian nationals crypto-accused, the US presidential elections in 2016, “interfere”.
Blockchains exploits were not unnoted, although the technology is not yet Mature,
Fairfield stressed that “the potential of Blockchain technology is significant,” and outlines seven examples of the success of the technology in various areas, including: strategies for firm, immediate and international payments, digitization of securities, secure transactions and transparent voting systems that minimize the risk of another international scandal after a great choice.
In her speech, Amber Baldet, former head of the Blockchain Center of Excellence, JPMorgan Chase, spoke also about the technology, although it was reminded that the Blockchain is Mature enough to be the ultimate solution for every single Problem.
“When it comes to electronic voting, we have to be extremely careful, as we are not ready, the complex Problem of computer science and co-ordination to address.”
decentralization is not a serious Problem for Mainstream users
The witness group dealt with the question of decentralization, an aspect that appears in the context of mass adoption and regulation is often problematic. Like the experts suggest, however, there is no significant impediment: Gensel called it a “natural irony” that the underlying technology is decentralized, but the industry has concentrated in a few hands: for Example, in centralized exchanges such as Coinbase.
Similar to Gorfine of LabCFTC noticed that the crypto-technology enables Peer-to-Peer transactions, “most of the activities are, however, a new type of intermediary to be held, in the case of the AML and KYC rules may apply”.
Congressman Conaway summed it up:
“as Long as the stupid use of criminal Bitcoin, it will be great.”
Financial autonomy and inclusion: International experience
Amber that the US market was always unregulated, widely, and urge, the experience of other countries with the technology to incorporate. She outlined Malta and Switzerland, the “Crypto Valley” as Prime examples for a positive introduction and referred to initiatives in other countries, are less for the promotion of the technology are known, such as Afghanistan, where Roya Mahboob, CEO and co-founder of the Digital Citizen Fund, over 9,000 Afghan women and girls in educational programmes has enrolled.
room for skepticism
The Republican Congressman Collin Peterson seemed to be of crypto-currencies in the room less convinced. “So you simply print money out of Nothing?”, he cried at some point.
He then proceeded, with the mandatory comparison of the crypto-period to a “Ponzi scheme,” and asked what gives Bitcoins value. The former CFTC Chairman Gensler retorted:
“There is nothing really behind the Gold … what’s behind it is a cultural Norm for Thousands of years, we like Gold … We can make it as a store of value, so Bitcoin is a modern Form of digital Gold. It is a social construct.”
Not for legislation, though not for “hasty”
While the General Tenor of the hearing to the fact that positive regulation (or, clearer as Gensler puts it, “to”, to help strict regulation) of the industry, argued Gorfine of the CFTC, that the government should be avoided, hasty decisions to proceed:
“… “… While some strive for the immediate establishment of clear lines, it is in reality, so that a hasty regulatory pronouncements fail to likely to be the target, unintended consequences, or important nuances about the structure of new products or models do not capture.”
The House Financial Services Committee hearing: the call for a crypto ban, CBDCs are “one of the worst financial ideas”
meanwhile, a parallel hearing in the Congress was not so fruitful for the industry, as the head of the Federal Reserve Jeremore Powell, crypto-currencies, to be referred to as “dangerous for investors,” Congressman Brad Sherman (the same that currencies in the past Crypto “absolute calling bullshit”) ) even went so far, “U.S. to ban people buying or the Mining of crypto-currencies”, and Alex Pollock, a senior associate at the R Street Institute, argued that “a digital currency, a Central Bank was one of the worst financial ideas in the last time”
