USA policymakers ponder tougher rules for cryptocurrencies

09 February, 2018, 08:24 | Author: Charlene Valdez
  • Jay Clayton chairman of the U.S. Securities and Exchange Commission, speaks during a Senate Banking Housing and Urban Development Committee hearing in Washington D.C. U.S. on Tuesday Feb. 6 2018. Cryptocurrency exchanges roiled by the rout

Tuesday, US lawmakers pressed the 2 Top US securities regulators on cryptocurrency, and now the approach is "do no harm" to the digital currency market, and monitor the ICO market.

Bitcoin rose for the first time in six days, snapping a losing streak that had helped push overall losses in digital currencies to about $500 billion, as the top USA market cops said they possessed all the authority needed to regulate and risk appetite returned to financial markets.

The hearing comes as interest in the currencies has boomed, with many coins reaching record highs before a recent slump in the market.

The SEC chief also said his agency planned to take a closer look at initial coin offerings, digital coins released by companies to raise funds.

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"We are open to exploring with Congress, as well as with out federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate", Clayton writes in his prepared testimony.

But the question of who is best placed to oversee the underlying cryptocurrency cash market remains unclear.

Senators involved with the hearing seemed, by in large, to be supportive of more aggressive efforts and willing to assist the SEC and CFTC in coordinating them. Previously, Clayton had only said that some ICOs functioned as securities.

"Our whole thesis is that these technologies can't flourish and grow without thoughtful regulations connecting them to traditional finance", Winklevoss said. Some say that this is because the law is not clear.

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At the end of the day, the big concern for Jay Clayton proved to be fraudulent ICOs. The SEC has taken regulatory action against ICOs it believes are actually securities, however, his comments Tuesday suggest regulators will ramp up enforcement.

Digital currency advocate Tyler Winklevoss, who said he's an investor in Bitcoin, Ethereum and a few others, welcomed the imposition of regulations, in an interview with Bloomberg in Abu Dhabi.

The pair also talked about the unregulated nature of cryptocurrency exchanges and called for an interagency coordinated plan among states, federal regulators and the SEC and the CFTC to address a common misconception among investors that these types of platforms are regulated. "They go to price discovery, custody and some other issues around volatility". If we get comfortable with those rules, we can move forward.”.

Reuters reports that the hearing will be a fact-finding exercise to clarify the powers of the SEC and CFTC to regulate cryptocurrency exchanges, and how the agencies can protect investors from fraud.

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Nevertheless, the regulators expressed that they would not like to crush development of blockchain technology and are likely to explore how regulators can strike a balance between investor protection and innovation. “As I have said many times, there are thousands and thousands of private placements that go on every year in the USA, and we want them to go on.”.

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