Cardano co-founder, Charles Hoskinson has told the US Congress that it should develop regulations for cryptocurrencies, but leave enforcement to software developers.
Hoskinson compared the ideal deal for crypto regulation to how bank self-regulation works during a congressional hearing on Thursday, telling lawmakers, “it’s not the SEC or the CFTC that are looking to do KYC-AML, it’s the banks”:
“It’s a public-private partnership. What you have to do is set those boundaries, and then what we can do as innovators is write programs that help do that.”
The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are two of the financial regulators vying for jurisdiction over the cryptocurrency industry.
representative Austin Scott, from Georgia, stated that neither the SEC nor the CFTC have the necessary personnel to supervise the thousands of cryptocurrencies that exist in the market, and said that “it is not possible to regulate all these currencies”.
Hoskinson countered that the ability of cryptocurrencies to store and transfer data means that they can carry out much of this regulatory work automatically. He also used it as a justification to allow the cryptocurrency industry to create self-regulatory organizations (SROs) to guide regulatory compliance, as the private banking industry does.
Hoskinson suggested that the industry could create a “self-certification system” that would automatically monitor compliance until an anomaly was found, at which point a financial authority would review it.
To further illustrate why personnel should not be a concern for crypto regulation, Hoskinson hypothesized that even quadrupling the size of the Internal Revenue Service (IRS) would not be enough to audit all Americans.
Instead, Hoskinson told Scott that cryptocurrencies can be programmed to prevent the settlement of transactions until the checks required by law are carried out.
Hoskinson’s testimony on Thursday posted via the Input Output Hong Kong website showed that he was willing to work with federal regulators on developing new rules, stating that Regulatory compliance and legislation coming out of the US “should be a guiding value for the blockchain industry”:
“However, this is a new technology and a radically new asset class that cannot easily fit within the confines of laws and tests created almost a century ago.”
Hoskinson’s calls for clarification of the boundaries in the crypto regulatory landscape echo those made by others in the US industry last December. SEC Commissioner Hester Peirce recently blamed a lack of regulatory clarity in part on the SEC for consistently refusing to launch Bitcoin spot exchange-traded funds (ETFs) in the US.
Clarification: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.