The issue of crypto industry regulation is still open in many countries of the world, and if in some states the legislation in this sector is already fully operational, many other governments of the world still do not fully understand what, for example, Bitcoin is. On July 18, the U.S. Congress held hearings regarding the crypto industry. One was conducted by the U.S. Senate Committee on Agriculture, and the other by the House Financial Services Committee.
The approaches during the discussion turned out to be diametrically different, as some were very friendly towards the crypto industry, while others expressed prejudices and conservative opinions.
The positive attitude toward cryptocurrencies and the desire to understand all the intricacies of the industry was demonstrated at the first hearing from the very beginning. "This hearing will shed light on the digital assets and regulatory issues facing this new asset class. Our committee shows a deep interest in promoting strong markets for all types of goods, including new technologies," said Michael Conaway, Republican and chairman of the 11th congressional district of Texas, before the hearing in the House Committee on Agriculture. "We are interested in creating security because it directly affects the product."
Can Cryptocurrency Regulation Be Shifty?
First of all, the question of determining the status of Bitcoin was raised during the meeting. At the moment, various U.S. agencies have different views of the crypto industry. If the Securities and Exchange Commission (SEC) considers cryptocurrencies as securities, the Commodities and Futures Trading Commission (CFTC) considers them as commodities.
Therefore, during the hearings, a proposal was made to provide digital tokens with a special, "floating" legal status. During the ICO, it can be an "investment contract,” thus falling under the control of the SEC.
Then, after the beginning of their use in the blockchain, they can become relevant for the CFTC, changing their legal status and economic definition. This innovation can help with the definition of the status of Ether. The fact is that, according to rumors, last year the token was classified as a security. Nevertheless, this generates a paradox, because if this is true, the ICO conducted several years ago will be considered illegal.
What about Crime?
According to the managing partner of the private American venture company Andreessen Horowitz, Scott Kupor, Bitcoin is the best friend of law enforcement agencies, because one way or another, even anonymous transactions can still be tracked. "Bitcoin, in fact, is the worst tool for money laundering because every transaction is registered and recorded," he explained.
The listeners and speakers did not avoid the subject of the influence of blockchain on the modern world. Thus, according to Gary Gensler, senior lecturer at the MIT Sloan School of Management, decentralization is not generally a problem for most users, but, he says, it seems rather ironic that the underlying technology has remained decentralized, while the entire industry is concentrated in the hands of several large, centralized exchange platforms. Daniel Gorfine of LabCFTC stressed that although the crypto industry allows peer-to-peer transactions, most types of transactions are conducted through a new type of intermediary, where AML and KYC can enter the game. "As long as stupid criminals continue using Bitcoin, it will be great," Conaway agreed.
On the other hand, not all those sitting in the hall were so friendly towards digital currencies. Some, apparently, did not fully understand the basic concept of the crypto industry. "So they just print money out of nowhere?" Republican Congressman Collin Peterson exclaimed, continuing the standard and long-standing narrative about Bitcoin being a Ponzi scheme.
Gary Gensler immediately objected, however, by dusting off the story about the evolution of money: "There really is no gold backing Bitcoin. A cultural norm is backing it, therefore Bitcoin is a modern form of digital gold. This is a social construct."
In general, the hearings were held in a rather optimistic atmosphere. Many participants came to the conclusion that the industry needs "soft regulation,” but it must be done very carefully, by all possible means trying to avoid shock-inducing situations.
Let us remember that Russian legislators have not yet passed a law on the legal status and taxation for cryptocurrency miners and holders, but it is likely that they will fall under the law that already exists.