J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC) presented a written testimony before the Senate Banking Committee today, suggesting a “do no harm” registration process for distributed ledger (blockchain) and cryptocurrency companies and start-ups. The full testimony can be found here.
Giancarlo had the following to say: “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.”
Amidst growing tensions surrounding global crackdowns on cryptocurrencies, the testimony appears to be quite supportive of distributed ledger technology, making comparisons between the dot-com era and the blockchain movement that is going on now: ”’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.”
The written report did note that there were a number of outstanding issues to be dealt with, such as bad actors taking advantage of people new to 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. This is only to be expected in a booming industry, with so much interest and sheer volume, bad actors will naturally try to get involved — particularly when there’s the potential for people to make quick money, as is the case in the crypto-space.
Today’s statements by the Giancarlo and the CFTC sound similar to ones made by the SEC recently, which also offered some positive reactions towards blockchain technology and cryptocurrency. Last month, SEC chairman Jay Clayton said the following: “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.” Although this isn’t to say the SEC is, yet, totally on-board. Clayton warned potential investors that, “To date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies.”