Should regulation of the cryptocurrency space be limited? J. Christopher Giancarlo – chairman of the Commodity Futures Trading Commission (CFTC) – sure seems to think so. He believes a “do not harm” approach is the best one to take. Otherwise, officials run the risk of harming innovation.
Regulation – How Big Will It Get?
Regulation in the crypto arena has always been a hot topic. Some believe cryptocurrency is so prone to financial fraud and malicious activity, that the market needs to be monitored every step of the way. Others say cryptocurrency is a birthing technology that can (and will) revolutionize the financial market, and any attempts to get in the way of that could potentially harm the global economy.
So, who’s right? Perhaps the best route to take is one that’s in the middle. Reject all extremes and take a careful, yet simpler route. At the Singapore Summit on September 14, Giancarlo compared cryptocurrency to the internet, and says the main reason it’s flourished is because officials agreed that rigidity wasn’t the answer.
“I’m advocating the same approach to cryptocurrencies and all things having to do with this new digital revolution of markets and of cryptocurrencies and of asset classes.”
Maybe Leniency Is the Best Approach
However, he did point out that some of the same fraudulent activity occurring on international exchanges and in precious metals are now taking place in the cryptocurrency market. Thus, some regulation is necessary if digital assets are to continue progressing and moving forward:
“When it comes to fraud and manipulation, we need to be strong. When it comes to policy making, I think we need to be slow and deliberate and well informed.”
Some have been critical of regulators’ attempts to monitor crypto, saying they’ve been too slow when it comes to implementing the appropriate legislation. However, Giancarlo denies these claims, saying that bitcoin futures are now allowed in the United States – the only country to permit such activity thus far:
“Some would say we’re too slow. Others have said we’ve been too fast. So, we at the CFTC saw the very first regulated offerings of bitcoin futures. No other regime in the world has allowed this to go forward.”
The CFTC Has All the Power
Cryptocurrencies like bitcoin have been monitored and controlled by the CFTC since 2015, though some assets of a decentralized nature and sold through initial coin offerings (ICOs) classify as securities and fall under the watchful eye of the Securities and Exchange Commission (SEC).
In July, the former offered a warning on its website to those willing to trade in cryptocurrencies, saying that doing so was risky thanks to growing fraud in the virtual currency space. The website continued to say that they should always use caution when deciding which ventures to explore, and to avoid those advertising utility coins or promising abnormal returns.
Be Careful AND Positive
At the same time, CFTC Commissioner Rostin Benham recently expressed his opinion that cryptocurrencies are here to stay, and likely to have massive effects on the way the world handles and views money. In June, Benham exclaimed:
“Virtual currencies may – will – become part of the economic practices of any country, anywhere. Let me repeat that: these currencies are not going away, and they will proliferate to every economy and every part of the planet. We are witnessing a technological revolution; perhaps we are witnessing a modern miracle.”
A Few Final Words
Giancarlo has also noted that:
“Bitcoin and a lot of its other virtual currency counterparts really have elements of all the different asset classes, whether they’re meeting payment or whether it’s a long-term asset.”