Key Takeaways From the Senate Bitcoin Hearing – SEC, CFTC Testimonies and More
Both the SEC and the CFTC agree that Bitcoin is not a systemic risk now because it is a relatively small market
The Senate Bitcoin Hearing
The Senate Banking Committee’s hearing on the oversight of virtual currencies with the U.S. Securities and Exchange Commission (SEC) and the U.S. Commodity Futures Trading Commission (CFTC) on Tuesday morning, had some key takeaways for cryptocurrency enthusiasts, investors, and market participants actively engaged in the purchase, sale, trading, issuance, rating, and / or the regulation of cryptocurrencies. The hearing was called by The Committee on Banking, Housing, And Urban Affairs to hear testimonies from the SEC and the CFTC on the opportunities, challenges, and dangers of Bitcoin (BTC) and other cryptocurrencies, with an intention to aid rising investor concerns about the market.
Notable spokesmen at the hearing included:
- Senate Banking Committee Chair Mike Crapo
- S. Securities and Exchange Commission Chair Jay Clayton
- S. Commodity Futures Trading Commission Chair Christopher Giancarlo
The SEC’s Stance
The SEC’s key points, as brought forth by Clayton at the hearing included (but were not limited to):
- The stance that technological innovation for capital raising should be embrace,d but not at the expense of protecting investors and the markets.
- The risks of investing in ICOs and cryptocurrencies are significant because many promoters are not complying with US securities laws, and because investors who put money into them may have their money sent overseas without their knowledge.
- The risk of not being able to effectively pursue the overseas cowboys in the products in the current crypto ecosystem
- The need for more computer horsepower with the SEC in order to regulate Bitcoin, and for more workers in its Enforcement and Trading and Markets Divisions
- 5 issues that the SEC needs to resolve before approving cryptocurrency ETFs are:
- Valuation and custody of the funds’ holdings
The CFTC’s Stance
On the other hand, Giancarlo had the following points to make when speaking on behalf of the CFTC:
- The current federal system for regulating Bitcoin is a patchwork, not a comprehensive structure
- Appropriate federal regulation of cryptocurrencies may include data reporting, capital requirements, cybersecurity standards, measures to prevent fraud and price manipulation and anti-money laundering and “Know your Customer” protections
- “We must crack down hard on those who abuse our enthusiasm for Bitcoin and blockchain technology”
Both the SEC and the CFTC agreed that Bitcoin is not a systemic risk now because it is a relatively small market. Together, the two financial regulatory authorities of the U.S. testified to tighter regulation and a more coordinated response between federal agencies, in order to protect investors from fraud and abuse in the cryptocurrency markets. While scams and fraudsters must be cracked down upon, the general market must simultaneously be allowed to develop.