A recent hearing on cryptocurrencies before the US Senate took a surprisingly optimistic tone, allowing cryptocurrency users to breathe a sigh of relief.
Jay Clayton (Chairman of the Securities and Exchange Commission) and Christopher Giancarlo (Chairman of the Commodity Futures Trading Commission) spoke before the Senate Banking Committee on Tuesday, as reported by TechCrunch. Both Chairmen drew the distinction between what can and should be regulated as well as outlined the differences between cryptocurrencies, ICOs, and blockchains for lawmakers, painting the former in a much more favorable regulatory light.
Regulation sought, though less so for cryptocurrencies than for ICOs
Clayton (SEC) was skeptical of the use of cryptocurrency as currency because of volatility, and was interested in protecting “main street investors.” Meanwhile, Giancarlo (CFTC) defended Bitcoin’s value using the concept that mining sometimes does and does not correlate with price. Giancarlo’s (CFTC) written report recognized that Bitcoin, with its distributed ledger technology, allows insight into fraud, manipulation, and markets that were previously impossible with traditional currency. Nevertheless, both Clayton and Giancarlo were in favor of regulations in one form or another.
Clayton (SEC) and Giancarlo (CFTC) were concerned that consumers may be unaware of the unregulated nature of cryptocurrencies, and that regulation is needed to protect these misinformed consumers. Clayton would like a coordinated plan among state and federal regulators to protect misinformed consumers from mishandling their own wealth. Clayton was particularly concerned about ICOs and organizations that “engage in semantic gymnastics… to avoid having a coin be a security,” and said that these coins and organizations “are squarely in the crosshairs of our enforcement provisions.” Senator Warner was one of the more knowledgeable senators that recognized that blockchains “could be as transformational as wireless” was at the turn of the century. However, he still complained that current regulations block Bitcoin ETFs, but continue to allow Bitcoin futures and believes “a much more coordinated effort” is needed.
Dash could preempt regulatory concerns
In contrast with many other cryptocurrencies, Dash has sought to provide all tools necessary for users to engage in full legal compliance if desired, presenting an innovation that is much less of a target for additional regulation. In 2016, Dash partnered with Coinfirm to allow for various methods of AML/KYC compliance. The platform will also allow Dash users to build a “verifiable credit history and rating.” In addition, Node40 has partnered with Dash last year to provide tax compliance software. Since the IRS considers cryptocurrency property instead of currency, every sale brings a profit and loss that accumulates to tedious accounting. Node40’s founder, Perry Woodin is a Dash Core adviser and formerly assisted in business development.
The Dash Community’s ability to create an extremely well functioning cryptocurrency, governance system, and ability to implement AML/KYC and tax compliance software begs the question if it is even necessary for regulators to consider additional restrictions. By anticipating and implementing measures that could later be a concern of governments, Dash could potentially avoid attracting undue regulator attention.