U.S. is Behind the Curve on Crypto Regulations
The U.S. is ‘behind the curve’ on crypto regulations, says SEC Commissioner Peirce and I agree with her. The Commissioner is calling on Congress to streamline regulatory framework around crypto.
Many in the financial industry and even some regulators are warning that the U.S. is falling behind other countries in constructing a rational regulatory framework for the blockchain and cryptocurrency industries. This to provide regulatory clarity threatens to deprive the U.S. economy of the benefits of new innovations.
Hester Peirce is one of what will be five commissioners at the Securities and Exchange Commission and she seems to be advocating for adoption of crypto.
We’ve seen other countries take a more productive approach to regulating crypto. Our approach has been to say no and tell people wait… we need to build a framework that is appropriate for this industry.
Cryptocurrencies and blockchain-related financial services companies are regulated by a number of federal and state agencies, including the SEC, the Commodity Futures Trading Commission, the U.S. Treasury Department and Federal Reserve, among others, and the industry has long complained that this complicated structure makes it difficult to understand the rules of the road. As a trader and hodler filing my taxes is complicated and costly. Now think of that on larger scale adoption for banks, companies and financial systems to integrate crypto into their legacy systems...
Peirce said she hopes Congress will step in to “draw some lines” and “urge us to come together as regulators and figure out what falls where,” so that entrepreneurs have a clear understanding of regulatory policy regarding crypto. She expressed optimism that Gary Gensler, who is on track to be confirmed as the next chairman of the SEC, will be able to use his experience as CFTC commissioner to enable a constructive working relationship between the two capital markets regulators. I too have faith that Gensler will streamline and cut the red tape around crypto. I have written about the subject and feel that this is the greatest hurdle for mass adoption.
Peirce also addressed the issue of central bank digital currency, which has been highlighted based on China’s recent unveiling of a digital yuan. We also had the news the Federal Reserve is currently studying the possibility of issuing a new, blockchain-enabled digital dollar.
She noted that private stablecoins could serve the same role as a government-backed digital currency, and have already proven their popularity. I agree with that that and we have many stablecoins that have proven this concept. So I would not be surprised that see some massive movement on this front as the fix the regulatory environment.
She also argued that the decentralized nature of some cryptocurrencies are where the “real power” of the technology resides. She notes that “Some of the weakness in our financial system comes from its concentration and you can make a more robust system” by relying more on decentralized elements, like the crypto. With these comments I would think she is a crypto enthusiast as this is exactly why i'm bullish on the entire space!
For those who are worried that the U.S. government will soon crack down on the use of cryptocin the name of investor protection or in order to maintain better control of the money supply, Peirce had some reassuring words.
“I think we were past that point where governments could effectively ban crypto]because you’d have to shut down the internet,” she said. “A government could say it’s not allowed here, but people would still be able to do it and it would be very hard to stop people from doing it. It would be a foolish thing” for a government to attempt, Peirce said.
I can't agree more and I think it's this type of thinking that needs to be more widespread. With Peirce and Gensler working on the regulatory issues we are facing I have never been so bullish that it will be figured out. I don't think this bull run is over. In fact, I think we are in the middle stages of a run!
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