Both the Congressional Agriculture Committee and the Financial Services Committee held hearings on the future of digital assets and cryptocurrency. Please see comments from leaders in the industry including Deepak Jain, CEO of Swych, Kalin Stoyanchev, Project Lead of RNDR, Al Burgio, Founder and CEO of DigitalBits, Josh Garcia, Co-founder of Ketsal Consulting and Principal of Blakemore Fallon, and Eiland Glover, CEO of Kowala.
Deepak Jain, CEO of Swych
“The banking system has taken a century to barely cover half the world while the mobile phone and the internet has covered 2/3rd of the globe in less than 20 years. Cryptocurrency riding on the connectivity provided by technology can bring financial inclusion to the globe at a much faster pace than the banking system can.
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Cryptocurrency defines the idea of a medium to transfer value between two parties where cryptography can be used to add trust and security to the transaction while eliminating centralized control. Regulations are needed to ensure that such a currency doesn’t empower bad actors. Regulations are also needed to ensure that for-profit ventures don’t create unnecessary currencies that are not backed by demand or assets for the sole purpose of duping investors into pouring money into such ventures. However, regulation clarity is also needed to ensure that a true alternative to fiat currency that can outperform the banking system with respect to coverage, speed, trust, safety, fees and reliability is allowed to emerge and flourish.”
“Although a lot of the commentary from Congress today focused on cryptocurrency as a potential investment vehicle, I think more time should be put into dialogues about the technological capabilities of blockchain through crypto. Many companies are now looking at the potential for blockchain tech to be weaved into new and existing verticals; without clear rules, the ability for these companies to explore and innovate is limited. I encourage more conversations surrounding blockchain as a whole and would like to see clear guidelines on what is and what is not acceptable within cryptocurrency and blockchain from Congress’ perspective.”
Al Burgio, Founder and CEO of DigitalBits
“Blockchain technology is causing new innovation and economies to emerge. Regulatory clarity, that includes a clear framework that defines currency vs security vs commodity, is imperative for the US market to be on the forefront of this emerging global opportunity. Other countries have defined such framework and are attracting innovators from around the world. This trend will only continue if blockchain companies and policymakers within the US are unable to reach a common ground in the near term.”
“Five years ago we saw one congressional hearing on bitcoin. Yesterday marks the 5th hearing this year on blockchain technology. It’s unfortunate some of the conversation today echoed the conversation from half a decade ago. Still, we’re encouraged to see congressional leaders further educate themselves on the myriad legal challenges placed before developers. A patchwork approach to regulation cannot efficiently govern this complex industry. Hopefully this hearing heralds common sense rulemaking that builds on the pioneering work already completed by global self-regulatory organizations. We feel strongly that any new laws should take a principles-based approach to promote responsible development and should not hinder technical innovation.
The SEC has been fairly consistent in its position that a token offering that fits the definition of an “investment contract” under the Howey test is a securities transaction. Under that rubric, the SEC has maintained that most token offerings sold in the form of a public ICO likely qualify as securities offerings.
The problem is not in the lack of a definition, it is in the designation. While tokens may represent “investment contracts” under Howey, their purpose is to facilitate the development, adoption and operation of a decentralized ecosystem by providing both a mechanism with which to transact in that ecosystem (the utility aspect), as well as an economic incentive for industry participants to expend efforts in building and maintaining that ecosystem (the investment aspect). But, if a token offering is deemed a securities offering, the friction caused by the regulatory framework surrounding securities transactions forecloses, or at least substantially stalls, the opportunity to build a decentralized network. The only way to solve for this friction is for Congress to create a regulatory framework that addresses the risks to retail investors, while enabling a frictionless transaction flow for the token to circulate within its intended ecosystem.”
Eiland Glover, CEO of Kowala
“The U.S. Dollar has been the world’s reserve currency since WWI. It’s now time for the U.S. to step up and claim the mantel of world leader in blockchain, crypto, and digital assets. To maintain U.S. preeminence in this next stage of money technology already upon us, elected government officials and unelected government regulators must remove barriers to private sector digital money innovation and work with industry players to secure the efficiency gains and wealth creation potential of blockchain technology while mitigating its potentially negative impacts and illicit use.
The truth is that we are at the beginning of a Cambrian explosion in money technology. There will soon be hundreds of thousands of distinct crypto-assets, each inexpensively converted into the next and instantaneously transmitted to anyone on Earth over decentralized networks. Practically everything will be tokenized. And, at the center of this new financial system, privately issued, stable “fiat” (that is, non-asset-backed) cryptocurrencies like the ones we’re developing at Kowala will soon offer users a truly superior new form of money technology.
With autonomous and decentralized stable cryptocurrencies now on the horizon, the U.S. government should work with U.S. based blockchain enterprises to ensure that these technologies are used to foster free-market capitalism and consumer choice at home and abroad.”