Set in Washington D.C. at the Dirksen Senate Building, the Committee on Banking, Housing, and Urban Affairs met in open session for about 2 hours.
Before the hearing began, testimonies were released on behalf of both witnesses.
The Commodity Futures Trading Commision (CFTC) and US Securities and Exchange Commision (SEC) met the morning of February 6 2018 to discuss their roles in Blockchain, virtual currencies, and ICOs.
The Pre-Testimonies
J. Christopher Giancarlo, chairman and witness of the CFTC, expressed optimism in his testimony towards Blockchain/DLT, dedicating a Jay Clayton, the chairman of the SEC, was a little less excited about virtual currencies — but he also wasn’t denying their role in a modern financial ecosystem.
“To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From a financial regulatory perspective, these developments may enable us to better monitor transactions, holdings and obligations (including credit exposures) and other activities and characteristics of our markets, thereby facilitating our regulatory mission, including, importantly, investor protection.”
But he also admitted that there still lay many traps:
“At the same time, regardless of the promise of this technology, those who invest their hard-earned money in opportunities that fall within the scope of the federal securities laws deserve the full protections afforded under those laws. This ever-present need comes into focus when enthusiasm for obtaining a profitable piece of a new technology “before it’s too late” is strong and broad. Fraudsters and other bad actors prey on this enthusiasm.”
While Giancarlo mentions the word “ICO” once in his testimony, Clayton
CFTC Chairman Giancarlo opens with a story of his 3 college-aged kids who are enthusiastic about #Crypto as most #millenials are. He advocated that we embrace #CryptoCurrency. Great stuff! We can thank his kids for that one. #PayWithLitecoin
— Łitecoin Dad™ (@litecoindad) February 6, 2018
He also mentioned Senator Crapo mentioned that neither agencies have complete jurisdiction over cryptocurrencies and ICOs. Giancarlo and Clayton both agreed that they “may need additional authorities to regulate”, but before they can agree to that they must learn more about the crypto space. Clayton also briefly touched on the issue that the SEC does not have enough money to hire more people.
When Senator Cotton asked Giancarlo about the value of Bitcoin, Giancarlo replied with “If there was no Bitcoin, there would be no DLT.” Both Clayton and Giancarlo know that cryptocurrencies are important for the development of DLT, and want to see the technology grow without getting anyone hurt in the process. Giancarlo also said that Bitcoin’s floor could not be zero. This is because Bitcoin’s value is “tied to mining.”
There wasn’t much talk at all about tax regulation. Clayton and Giancarlo also admitted that they have no jurisdiction over nation states, such as Venezuela, using cryptocurrencies to avoid sanctions.
Clayton did mention that while ETFs in Bitcoin are currently not ready, but that “there will be room in the future.”
Lastly, Senator Warren asked Clayton how they can make ICOs safer. Clayton responded that many ICOs are, in fact, violating existing laws and that ICOs “should pay more attention” because the SEC is going to be investigating these violations further.
The best solution, according to both Giancarlo and Clayton, would be to:
- Educate the masses about Bitcoin and cryptocurrencies
- Use the jurisdiction that they have over the futures markets of Bitcoin to collect data and keep track of the markets so that nobody gets too hurt
- Use taskforce to go after “fraudsters” who are scamming Main Street investors in ICO pyramid schemes, and worthless cryptocurrencies.
In summary, cryptocurrencies will allow growth for the United States the same way that the internet did. The United States should be a leader in this aspect, and make sure that nobody gets hurt in the process. Crypto HODL’ers alike all agree that the news was very bullish.
On a side note, Giancarlo thinks “HODL” is an acronym for “Hold On for Dear Life.”
Did Giancarlo just say HODL to a group of senators
— LIL CO฿IE (@CryptoCobain) February 6, 2018
