Representatives from US lawmakers and administration officials expressed their urgency Tuesday to bring clarity to the blockchain or digital asset industry during Axios’ “Crypto and the Investing Space” event.
Why it matters: If the rules in an industry are confusing, the bad actors are too.
Driving the news: “I would wave a magic wand tomorrow and start defining some of these things,” Rep. Darren Soto (D-Fla.) said Tuesday morning.
- Similarly, Christy Goldsmith Romero, a newly appointed commissioner of the Commodity Futures Trading Commission (CFTC), said, “I am certainly of the opinion that I would like to see Congress act.”
State of the situation: At the highest level, entrepreneurs in the cryptocurrency industry and their billionaire backers have long complained that they have no idea what is or is not against the rules in the US.
- At base, many investors have done very well investing in cryptocurrencies, but many others have lost life-changing amounts of money.
At both levels, people are asking government leaders to catch up.
Ward off: The big question governments are facing right now is this: are the rules that already exist for investors adequate for the task of managing cryptocurrency markets? Or should lawmakers and regulators start over?
What they are saying: Soto, who co-chairs the Congressional Blockchain Caucus, said he would “begin to define” terms relevant to the cryptocurrency industry.
- He was speaking of his view that crypto tokens and coins could be “a commodity, a security, a currency; it could even be a future. Trying to fit it into a 20th century box didn’t work and isn’t working now,” he told the King. of the Hope of Axios.
- “This is an example where existing laws are simply outdated,” he said.
Soto seemed to express frustration at the pace of legislation, regretting that most of his colleagues want to know the administration’s opinion on these issues before drafting new laws.
- “Our job is to pass new laws to evolve to what society has,” he said.
- Meanwhile, Soto outlined the light-touch approach that he and his colleagues in the Blockchain Caucus would prefer.
- “We want to make sure we have protective barriers in place for the most blatant fraud you can see, like pump and dump,” he said, rather than go further and try to protect people against market risk.
soto declined to specifically endorse recent legislation by Senators Lummis and Gillibrand, but noted, “We definitely agree that the SEC’s jurisdiction should be narrowly defined.”
Yes, but: Goldsmith-Romero described the task of those working under the legislative authority now in place, the agencies, as trying to see what is to come. “I think we’re looking to the future and asking where we should build the road,” she said.
But they’re doing it blind, he complained.
- Victims and complainants they are the main way agencies figure out where to look for trouble in the cryptocurrency industry right now, he said.
- “The CFTC does not have any regulatory authority. We can’t look at books and records,” he said.
- “We have a pretty sizeable market that is essentially unregulated. Regulators don’t have a window to get into it,” he continued.
Nevertheless, he said, the CFTC has taken something like 50 actions in the space and also cleared 11 crypto-focused products for trading in the markets it regulates, under its mandate to enable responsible innovation.
The bottom line: “If regulation doesn’t keep pace with technology, the most vulnerable people will be hurt,” Goldsmith-Romero said.
Watch the full event here.