S.E.C. and C.F.T.C. Crypto analysis session in the American Senate

S.E.C. and C.F.T.C. Crypto analysis session in the American Senate

Yesterday, February 6, an analysis was held in the American Senate’s Economic Commission where SEC Chairman Jay Clayton – named by President Trump and CFTC Chairman Christopher Giancarlo – was invited. The two responded to US senators, and the debate was followed with great interest by the bitcoin community. The break comes just one day after the Dow Jones index had the biggest daily fall in history, and Bitcoin’s downgrading had canceled the rise in the past three months.

After a week of falling prices and bad news, the talk tone was reasonably interpreted as being optimistic, and, according to analysts, it has trusted the markets.

During the open hearing, Clayton and Giancarlo testified to what can be regulated, what should be regulated and how, while providing a wider perspective on the long-term future of digital money markets and blockchain technology.

In the presentation of the two presidents, a useful distinction was made between the three pillars of the digital monetary ecosystem: cryptocurrency “dollar replacement”, ICO, “as an offer of actions” and distributed registry technologies, a general framework known as the blockchain.

During the hearing, on behalf of the SEC, Clayton had a relatively solemn tone, and focused on concerns about ICO fraud, while Giancarlo (CFTC) was really excited and curious about the emerging market, and justified the general interest in this phenomenon through the example of their own children.

We have selected some “statements” of the two interesting presidents for the Bitcoin community:

Giancarlo about Bitcoin: “It’s new, developing and international”

Giancarlo (about the intrinsic value of cryptocurrency): Explained the value of Bitcoin, explaining the mining process and how it correlates with the price (or sometimes breaks the correlation, as suggested by the economists it cites).

Clayton on the same question: It is funny that the value of cryptocurrency is related to integration with the financial system. There are a lot of intelligent people who think there is value in cryptocurrency, that it grows with integration with the financial system and I do not see that these benefits are still on the market.

Giancarlo (on the benefits of a long-term Bitcoin market) “CFTC can now get transaction data and analyze it for fraud and manipulation.” With Bitcoin ETFs we now have visibility in core markets and spot markets that otherwise we would have them. ”

Clayton made other comments that questioned the usefulness of cryptocurrency as a currency, invoking common concerns about how market volatility makes transactions difficult.

Both Presidents have expressed their concern about the unregulated nature of cryptocurrency exchange platforms and their potential to mislead consumers by making it clear that there is a regulatory network of some kind.

“To be clear, the CFTC does not regulate dozens of digital trading platforms here or abroad,” Giancarlo said, clarifying that the CFTC can not demand cyber-protection, platform guarantees, and other things consumers might expect from traditional platforms.

Regarding coordinated regulation:

Senator Mark Warner, who has expressed more familiarity with this area than most of his colleagues, has criticized the nature of the regulatory mosaic that allowed Bitcoin contracts while still blocking ETFs, called for a “more coordinated” effort among regulators . In this way, Warner offered an upward view. “The high potential of crypto and blockchain assets could be as transformative as wireless many years ago. I think we will need a much more coordinated effort, “Warner said.

Clayton also called for a coordinated plan between states, federal regulators and the SEC, CFTC, FED and IRS, to address regulatory work in terms of competence, jurisdiction, safety, resources. He said that preliminary discussions had begun between all the actors involved.

Everyone said that the debate for settlement was far from apocalyptic. Although it is clear that the CFTC and the SEC only scratched the surfaces of sets of rules that they would like to implement, their plans seem to be focused on three major directions:

Protect consumers from “aggressive” fraud through ICO.
Protect investors from market manipulation, possible due to regulatory vacuum.
Enforcement of security and guarantee rules for crypto-enabled platforms.
For anyone interested in the health and long-term viability of virtual coins, this should be good news.

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