Crypto Before Congress: The SEC and CFTC Testify on Blockchain and Crypto
On Tuesday, Jay Clayton, Chairman of the Securities Exchange Commission (SEC), and Christopher Giancarlo, Chairman of the Commodity Futures Trading Commission (CFTC), testified in front of Congress on cryptocurrencies. We know not everyone loves spending their Tuesday evening catching up on congressional testimonies, so we thought we would break down the critical points for you.
THE PRE-TESTIMONY TESTIMONIES
On Monday, both Giancarlo and Clayton released testimonies in advance of the hearing. Giancarlo was incredibly optimistic about cryptocurrencies. He spoke highly of the upside of blockchain, laying out the benefits it could have for social services, charities, logistics, and financial services. The key takeaway here was the comparison of blockchain/DLT technology and the internet. He stated that “do no harm” was unquestionably the right approach to the development of the Internet, and similarly believed that it was the right overarching approach for distributed ledger [e.g. blockchain/crypto] technology.
ICO TALK
Giancarlo only mentioned the term initial coin offering (ICO) once, but Chairman Clayton of the SEC said this word over 132 times. Clayton referenced a study that stated 10% of all ICO proceeds have been lost to hacks and fraud. As the SEC is the agency that is tasked with the responsibility of protecting investors and stopping bad actors, it is no surprise that this has been on the top of Clayton’s mind. As with Giancarlo, Clayton also praised blockchain technology, stating, “we should embrace the pursuit of technological advancement, as well as new and innovative techniques for capital raising.” However, he also inserted the caveat that this pursuit of advancement should not come, “at the expense of the principles undermining our well-founded and proven approach to protecting investors and markets.”
“IF THERE WAS NO BITCOIN…”
Both Clayton and Giancarlo seemed sincerely excited about not only blockchain technology but also cryptocurrencies. Throughout the hearing, there were some particularly entertaining moments for all of us in the crypto space. The frontrunner on twitter would be when Giancarlo explained “HODL” a slang term that is used in the bitcoin community when referring to holding cryptocurrency, as opposed to selling it. A more important, but less hilarious moment was when Senator Tom Cotton from Arkansas asked about the “value” of Bitcoin. Giancarlo responded to Sen. Cotton that, “if there was no Bitcoin, there would be no DLT [distributed ledger technology].” Both Giancarlo and Clayton seemed to truly understand the significance of the connection between crypto and the blockchain. They are both trying through regulation and programs, like the CFTC’s Lab CFC, to educate and protect so-called “Main Street Investors.”
KEY TAKEAWAYS
In a perfect world, these two men would have stepped out and gave ringing endorsements for cryptocurrency and the markets would have bounced back to all time highs .
Well, that didn’t happen, and we are glad it didn’t.
The reality of the crypto space, just like any other financial market, is that there are bad actors. Fraudsters have always preyed on the weak, and while there are more safeguards in traditional areas, they have jumped into crypto and done some significant damage. Regulation will help clean things up, and if done carefully and thoughtfully, can help the growth of the entire industry and further instil consumer confidence.
One particular quote from the entire hearing we have played on repeat came from Giancarlo in his opening remarks:
We welcome this “thoughtful and balanced response” from both the SEC and CFTC, and we look forward to continuing the conversation.
If you liked what you read, follow us to get notified when we publish new stories and hit the clap button so that others see this story.
