Today, February 5, 2018, in written testimony presented before the Senate Banking Committee, J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC), suggested a "do no harm" registration process of distributed ledger and cryptocurrency companies and startups.
Giancarlo said, "Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response."
The written testimony, which came off mostly positive and supportive of distributed ledger technology, made comparisons between the dot-com era and the blockchain movement that is currently happening.
Giancarlo went on to say, "'Do no harm' was unquestionably the right approach to the development of the internet. Similarly, I believe that 'do no harm' is the right overarching approach for distributed ledger technology."
Contrary to public tensions about regulatory actions, both the SEC and CFTC statements have come across relatively positive about blockchain technology and cryptocurrency. The SEC chairman even said in a recent statement, "I believe that initial coin offerings--whether they represent offerings of securities or not--can be effective ways for entrepreneurs and others to raise funding, including for innovative projects."
The written report did note that there were a number of outstanding issues as well, such as bad actors taking advantage of the space.
"Indeed, history has demonstrated to us time and again that bad actors will try to invoke the concept of innovation in order to perpetrate age-old fraudulent schemes on the public," said Giancarlo.
And that is to be expected. Any time there is a lot of excitement, interest, and sheer volume behind a movement, you're going to get bad actors trying to take advantage.
It's good to see that regulators are taking this approach in weeding out bad actors but making it painless and simple for others to be in the space. Just like the boom of the internet itself, it would have never happened if regulators made new, impossible-to-follow laws to try to account for the new paradigm shift.
If you think about it, the majority of these laws and acts were invented 50, 60, 70, even 80-plus years ago, in some cases. That was long before the computer, significantly before the internet, and very long before anyone even knew what a blockchain was. The regulators have the hard task of figuring out how to apply our great-grandparents' regulations to something that probably never even could have been dreamed up 80-plus years ago. However, it's positive and refreshing to see them taking reasonable steps without overstepping. I've been very happy with the support and positivity shown from U.S. regulators while they simultaneously swiftly deal with scams, fraud, and bad actors.