“Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission” this is the title that was under discussion at a U.S. Senate hearing, Tuesday.
As the name implies, the Senate hearing was focused at cryptocurrencies where Security and Exchange Commission’s (SEC) discussed its role in cryptocurrency regulation. The Senate meeting was attended by yet another regulator, the Commodities Future Trading Commission (CFTC).
Jay Clayton and J. Christopher Giancarlo, heads of SEC and CFTC were subjected to cryptocurrency-related questions from the U.S. Senators.
“As Chairman Giancarlo and I stated recently, we are open to exploring with Congress, 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,” said Jay Clayton in a pre-prepared statement.
Both Clayton and Giancarlo said that despite growing concerns about the technology and the potential harms related to it, a regulating move cannot be implemented immediately.
Clayton discussed the advantages and efficiencies that blockchain can offer to national and global economies in the future.
“The commission looks forward to working with market participants who seek to bring efficiencies, including more effective oversight, to our capital markets,” he said further.
Another category discussed by Clayton was “cryptocurrencies and ICOs, which are subsets of the products seeking to take advantage of the commercial opportunities presented by blockchain technology. One is promoted to be a replacement for dollars, and one is like a stock offering.”
Talking about the ICOs he said, “You can call it a coin, but if it functions as a security, it is a security”.
Clayton said that many ICOs are held illegally and that does not have anything to do with the law being unclear.
Giancarlo, in his opening remarks, said that the young generation is highly enthusiastic towards cryptocurrencies. He believes that their enthusiasm should be respected but at the same time, strict rules should exist against people who use the technology illegally.
He also urged that all the involved agencies should work together to keep a strong hand against fraudsters.
When asked by one of the Senators that whether the two regulators have hired enough technologists to supervise the industry, Clayton replied that a committee was formed that worked efficiently in “getting up to speed” and that new members are always welcomed. He also reported that his agency had a “combination of technologists and economists”.
While Giancarlo said that his agency has hired its first chief innovative officer, he has formed ‘Lab CTFC’ and an enforcement task force. He also notified that he has requested for more funding.
Senator Mike Rounds of South Dakota asked if Bitcoin’s status was that of a commodity, security or currency. Giancarlo answered that the largest cryptocurrency cannot be considered as a currency, as most of the people hold it because they think it is very beneficial. So yes, it is a commodity.
When asked about the investors who have lost lots of money to hacks (like Mt Gox) and what could be done for them, Clayton clarified that when someone invests their money online, the possibility of them getting it back “is very very low”. However, Giancarlo said that his agency simply lacks the ability to ensure that protections against cyber hacks are in place.
The two agreed that there should be a new legislation to oversee the industry.
While answering a question related to the basis of blockchain technology, Giancarlo said, “It’s important to remember that if there were no bitcoin there would be no distributed ledger technology”.
Also Read: Why Cryptocurrency Market Hard Crashed?