- Circle CEO charges Congress about the lack of regulation of cryptocurrencies in the united states
- The recent Geofencing of assets on Poloniex was a result of the recent SEC guidance
- Crypto scams on the rise due to lack of proper regulations
Bitcoin was designed with principles of decentralization as its core ideology which means that cryptocurrencies weren’t meant to be regulated by any central authorities in any way. As both cryptocurrencies and blockchain technology are still in the early stages authorities are struggling to settle on a regulatory path. The United States doesn’t yet have a systematic approach to the regulation of cryptocurrencies. Recently Jeremy Allaire, CEO and founder of Circle, a major Bitcoin wallet service, spoke on the matter in the company’s official blog.
Geofencing kills trade
The CEO claimed that this post was driven by the company’s recent decision to “Geofence” 9 digital assets on crypto exchange Poloniex to US customers. He stated that he was “deeply frustrated” over the need for this action but it was a direct result of the recent guidance where regulators take a broad view of what is considered a security i.e.; anything that is tradeable online. Allaire believes that the regulators have failed to keep up with blockchain innovation and he is directly charging congress. The Blog stated:
“We believe that digital assets represent a fundamental(ly) new class of financial instrument that defies simple classification as security, commodity, or currency. Many digital assets occupy one, two, or all three depending on their context and use. Innovative technologies deserve new regulatory frameworks, and we will continue to advocate for change. But without Congressional action, the Securities and Exchange Commission is forced to rely on 85-year-old laws and 73-year-old court cases to develop guidance about which digital assets might be considered securities. These laws are inadequate to address crypto—which doesn’t easily fall into established categories—and as a result, the SEC guidance isn’t easy or straightforward to interpret.”
Crypto Entrepreneurs are currently facing a lot of problems due to the lack of regulations. The SEC is inclined to enforce existing securities laws more broadly than it was intended. Regarding the recent SEC guidance, Allaire said it has created “more questions than answers.” It is pretty clear that Congress needs to be doing something to consider digital assets anything other than a security. Regardless of that, the US securities commission has displayed a positive approach towards cryptocurrencies by addressing the world’s two most popular cryptocurrencies; Bitcoin & Ethereum as not being Securities.
Lack of regulations causing trouble for crypto enthusiasts
The lax attitude of regulatory bodies has resulted in a steady rise of various crypto-based crimes. There have been numerous cases of fraud via fake ICOs (Initial coin offerings) where the company just goes dark after the sale, false crowdfunding ventures that promise huge gains to the public, fake exchanges and crypto-based applications. Exchange hacks are another one of the recent problems that have peeked. As previously reported by the Blockchain Reporter, New Zealand-based cryptocurrency exchange Cryptopia was hacked this January where the firm lost $2.5 million worth of ether. Similarly, in 2018, crypto exchange CoinCheck recorded a gigantic loss of $533 million to hackers.
Recently the New York attorney general accused Bitfinex and its affiliate Tether Ltd. of covering up the $850 million loss. Tether is one of the worlds most traded cryptocurrency because of its close to dollar value and stability. The acquisition raised many doubts. One can thus see the importance of having uniform regulations towards these fairly new technologies.
Congress and Cryptocurrencies
It looks like the Congress isn’t sure about how to approach regulation of cryptocurrencies. More than a dozen bills were introduced in the first three months of 2019. They seem to be eager to take on cryptocurrency regulation. Some of them aren’t. Like Brad Sherman, a Californian Democrat who wanted the US to introduce a bill which would Barr all US Citizens from purchasing cryptocurrencies. Ultimately the Congress has the power to regulate Cryptocurrencies under its exclusive constitutional power “to coin money” and “regulate the value thereof.” Thus it is their decision on how the United States deals with the currency of the future. The technology is not going away anytime soon as people have started recognizing its true potential so the Congress must figure out a way to make it happen.