The topic of regulation and legislative clarity is once again hitting the headlines. This time, words are stemming from former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler, who believes that stricter regulation in the crypto market will ensure investor protection and provide the world with full blockchain innovation.
In a recent interview, Gensler comments:
“If it [cryptocurrencies or blockchain] gets broad adoption, we really think the crypto world will be part of the future. It needs to come inside the public policy. The crypto exchanges, big exchanges like Coinbase really need to come within the SEC [Securities and Exchange Commission] or CFTC to protect investors.”
Cryptocurrency Crime Is Up
Illegal activity remains prominent in the cryptocurrency space. The number of phony initial coin offerings (ICOs) just this year alone has resulted in over $500 million hard-earned dollars practically vanishing overnight. Many new businesses and startups – seeking to raise capital for their operations – begin ICOs and allow investors to fund their ventures while providing them with a unique or special coin that gives them access to the company’s services and products.
Six months down the line, however, many of these startups completely disappear, while the investors are out thousands of dollars and likely stuck with a token they can never use.
In addition, a new report has emerged by way of cybersecurity firm CipherTrace that alleges roughly $1 billion has been lost to due to cryptocurrency-related cybercrime in 2018, though most of these funds vanished in last January’s Coincheck hack. Still, however, the figures suggest that the money lost by way of online malicious activity have virtually tripled over the last year.
Blockchain Is Cool – It’s Just Not Mainstream
Gensler believes that the blockchain has real power when it comes to finance, though at present, he feels it’s more hype than reality as even when looking at the blockchain’s biggest adopters, the ratio is quite small. In fact, he says that most government regulators still find it challenging when trying to utilize the technology to track fraudulent activity.
At the same time, he doesn’t want to stifle innovation, and thus believes only certain parts of the blockchain should be regulated. He explains:
“We should be technology neutral to promote innovation… I will be regulator neutral. I think the pure cash cryptocurrencies like bitcoin need more protection, and frankly even more protection than the oil, corn or weed market. Whether that’s the CFTC or the SEC, I will be neutral. I think the CFTC has good skills.”
Trying to Make Things Clearer
But perhaps the biggest problem isn’t the lack of regulation itself, but the fact that present standards can be somewhat difficult to understand. That’s why a team of lawyers working with the Gemini Exchange in New York are seeking to improve regulatory clarity and make it so that every crypto fan, from novices to longtime pros, can understand the environment they’re stepping into.
Sydney Schaub has recently joined Gemini’s legal team and will serve as the exchange’s general counsel. Schaub will deal with new jurisdiction expansion, product initiatives, and building the company’s in-house legal representation. Schaub will report directly to the company president, Cameron Winklevoss, with her findings and suggestions.
In a statement, Schaub commented:
“At this important moment for the global adoption of digital assets, establishing trust among market participants will be critical for success. Gemini’s leading market surveillance technology and digital asset insurance, coupled with its thoughtful approach to growth and regulation, are essential for creating this trust. I am looking forward to working with my new colleagues at Gemini to build the future of money.”
