For the past few days, cryptocurrency traders have been living in fear surrounding the regulatory environment. The structure for broad regulation of crypto markets may not exist now, but as Clayton told the committee, "we may be back with our friends from Treasury and the Fed to ask for additional legislation".
"We must crack down hard on those who try to abuse enthusiasm with fraud and manipulation" Chris Giancarlo, chairman of the Commodity Futures Trading Commission said.
US Securities and Exchange Commission (SEC) chairman Jay Clayton will give a wide-ranging account of the regulator's approach to cryptocurrencies in testimony before the US Senate tomorrow (Feb. 6), according to a copy of his prepared remarks uploaded to the Senate's website. "I think this distributed ledger technology has enormous potential". CFTC chairman, Mr. Christopher Giancarlo also said that we need to have a measured approach while dealing with cryptocurrencies and digital currencies can not be completely ignored or snubbed off.
His comments were his most critical on ICOs to date.
"The market is feeling regulatory pressure", said Zhou Shuoji, a founding partner at FBG Capital, a Singapore-based cryptocurrency investment company.
Congress probably will have to act in order to give either the CFTC or the SEC or some combination of both the authority to regulate cryptocurrency issuances and markets. "So Bitcoin is now being used, it's being used in our American transportation and logistics system", Giancarlo said, professing that his niece is a so-called cryptocurrency HODLer. It has explicitly said it does not have the power to directly regulate the underlying bitcoin cash market.More news: Schiff and senior Obama intelligence figures are 'liars and leakers'
Nonetheless, there were some concerns with regard to consumer misconception of trading platforms.
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.
"To be clear, the CFTC does not regulate the dozens of virtual currency trading platforms here and overseas..." A patchwork of overlapping state and federal agencies place the asset class in a legal grey area.
Clayton continued to say that "those who engage in semantic gymnastics or elaborate re-structuring exercises in an effort to avoid having a coin be a security are squarely in the crosshairs of our enforcement provision".
At the end of the day, the Senate Banking Committee hearing wasn't the doomsday hearing that many believed it would be for the cryptocurrency space. As a whole, cryptocurrencies have dropped about $500 billion in value since the beginning of the year. However, as the domestic cryptocurrency market continues to expand in tune with the global crypto economy, clarification and a well-defined policy are of paramount importance for all stakeholders. Join the CNA Finance mailing list below!
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