Now that cryptocurrency is booming, tens of thousands of mainstream investors and blue chip companies have adopted blockchain technology, and policy makers have begun to discuss the formulation of regulations to protect investors more seriously.I’m as worried about consumers as they are affected by volatility Bitcoin Price and an overnight crypto investment scam. At the same time, we need to be careful about our level of supervision of such an emerging market. We need some regulation to protect investors, but not to stifle entrepreneurship, innovation and investment.
Like the Internet in the early 1990s, the encryption industry is still in its infancy. We don’t know what a flash in the pan (Google Reader, anyone? ) And what will become the basis of our lives, such as social media or iPhone. Overly broad regulation is like regulating the Internet before we understand how online commerce will operate in the world. As early as the Internet, Congress It is impossible to predict the role that personal data mining and political disinformation will play, let alone how to protect consumers from them. At the time, the industry was promoting an open Internet in which anyone could create a web page.
Recently, the cryptocurrency industry has gathered to convene senators on the current language in the infrastructure bill. If miners and software developers have to worry about Know Your Customer (KYC) management, then a broad definition of “broker” language will certainly kill the entire industry. The purpose is to strengthen tax enforcement, but if the language remains the same, it will have serious unintended consequences. The bill may be voted on as early as August 9. The entire industry is paying attention to what happens in this language. It is hoped that a linguistic compromise can occur in order to better enforce the tax, while still not stifling an industry that has a wrong definition of “what is”.broker“In encryption.
Part of the difficulty in regulating crypto assets is that they can evolve. In the life cycle of an encrypted asset, sometimes it is more like a security, and at other times it is more like a commodity or even something else. Therefore, there is confusion as to which agency has the authority to supervise it. Another complication: Many people think that crypto assets are the same, but this is incorrect. There are several different classes and models, from cryptocurrencies to governance tokens. Each has unique risks, governance, purpose of use, ways of accumulating value, and role in the larger ecosystem. Cryptocurrency is designed as a store of value and a medium of exchange. Investors can buy, sell, buy and lend them to generate income through interest rates similar to sovereign currencies. In contrast, governance tokens give holders the right to vote on how to manage, upgrade, and govern the encrypted network. Regulators need to recognize this complexity and tailor new rules for different types of encrypted assets.
One idea that regulators are considering is timeliness—the concept that assets can start from securities and then turn into commodities over time. I support this approach.
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The US Securities and Exchange Commission (SEC) has stated that the tokens in the initial token offering (ICO) should be considered securities, and builders are seeking investment before building products and networks. However, when an encrypted network is built and the tokens are “sufficiently dispersed”, this is not the case.This direction comes in the form of explanations from two people’s opinions Inaction letter 2019 comes from the SEC. These differences have wide-ranging effects and should be written into the law. Regulatory opinions may change with each authority.
If light adjustment is the best place to start, then we should support Human resources1628, Called the token taxonomy. The bipartisan token taxonomy introduced by Congressman Warren Davidson (R-Ohio) in March 2021 aims to establish a clear understanding of businesses, consumers, and regulators operating in the emerging U.S. blockchain ecosystem. Davidson understands that if the United States does not establish a common-sense regulatory structure, many companies and entrepreneurs will seek to do business elsewhere.
The bill excludes digital tokens from the definition of securities under the Federal Securities Act. For example, it defines “digital tokens” as tokens created according to rules whose creation and supply are not controlled by a central body or individual, among other requirements outside.
Human Resources 1602Known as the 2021 Elimination of Barriers to Innovation Act, proposed by Representative Patrick McHenry (RN.C.), the goal is the same: clarity. HR 1602 will require the US Securities and Exchange Commission and the Commodity Futures Trading Commission to establish a joint working group to study the attributes of digital assets and issue reports with recommendations. I like this method and the token taxonomy because it initiates supervision from the legislative department and provides the direction required by the industry without being too strict.
U.S Senate The Economic Policy Subcommittee of the Banking, Housing and Urban Affairs Committee invited several digital banking experts to discuss Central Bank Digital Currency (CBDC) In the United States, they heard testimony from a series of experts including Neha Narula, director of the MIT Digital Currency Program.
“The potential promise of CBDC goes beyond payment efficiency and financial inclusion. Digital currency is an opportunity to redesign our traditional payment system. If designed in the right way, creating and supporting a digital dollar system may increase competition and standardize different data models. , Leading to more interoperability and creating a payment innovation platform, just as the Internet creates an innovation platform on top of information transmission,” Narula says, Acknowledging the potential shortcomings of this system.
Former CFTC chairman Christopher Giancarlo, also known as Crypto Dad, has also repeatedly expressed the importance of the digital dollar, saying that the Fed needs “Wake up the demand for digital dollars.
Good encryption regulation should reflect American values, including privacy, security, freedom, and sovereignty. If we leave it to other countries, such as China, we may be tied to a system built on completely different values-tracking, surveillance, central authority, and lack of public transparency.
I understand the impulse to fight-the world of cryptocurrency is confusing and turbulent.I don’t particularly like watching new Bitcoin investors suffer huge losses every time Elon Musk Decided to tweet. But it is crucial that policymakers slow down and study our market in more detail before rushing to legislate or supervise. We must strike the right balance between protecting consumers and stifling innovation.
Jack Ryan is the author Encrypted asset investment in the era of autonomy Chief Investment Officer of Tradecraft Capital.
The views expressed in this article are those of the author.
