Though there are efforts to regulate the crypto market, it still remains a grey area in most parts of the world. Though there are efforts to regulate the industry in order to legitimize businesses and protect investors, a lot of work still has to be done.
In fact, the US Securities and Exchange Commission dismissed recent Bitcoin ETF applications over concerns on price manipulation. Considering uncertainty surrounding the crypto market, around 50 representatives from fintech companies and crypto startups meet with Washington lawmakers this week. The talk hopes to create regulatory clarity within the niche.
It was Representative Warren Davidson of Ohio who is hosting the roundtable discussion. The roundtable discussion is entitled “Legislating Certainty for Cryptocurrencies”. The goal is to ask industry experts to weigh on how to regulate the cryptocurrencies. And their ideas are taken by the lawmaker before the bill gets introduced by fall.
Regulation with Good Intention
According to the letter that was sent to the invitees, “Your input is critical to helping us preempt a heavy-handed regulatory approach that could stall innovation and kill the U.S. ICO market”. There are a number of questions that were highlighted during the meeting.
For instance, “What is the best way to protect consumers from fraud?”. Another thing that will be covered during the meeting is the private funding disclosures as well as token issuance laws. Among those confirmed to attend included representatives from Fidelity, Nasdaq, State Street, Union Square Ventures and Andreessen Horowitz, and the US Chamber of Commerce. Ripple is also planning to attend along with Coinbase and Circle.
ICOs spiked in number especially after Bitcoin almost reached $20K last year. There were a number of both great ICOs to those that have issued tokens that don’t really have any practical use. A total of $12 billion came from ICOs in this year alone. Unfortunately, there is a great number of scams. It has been said that 1 in every 5 ICOs is actually a scam.
US financial watchdogs have been serious when it comes to consumer protection and innovation within the crypto market. However, it is quite common that crypto industry leaders are complaining regarding the handling of regulators. Davidson’s bill would’ve been the first of its kind.
SEC on Crypto Regulation
Jay Clayton of the US Securities and Exchange Commission made it clear that it is not going to update the securities laws in order to cater to the crypto market. However, cryptocurrencies Ethereum and Bitcoin were considered as commodities. But as for initial coin offerings. Clayton mentioned that it should be treated as securities and it falls under the jurisdiction of the agency. The US SEC follows the “Howey Test” in order to determine whether or not the asset is a security or not.
Though Bitcoin and Ethereum were considered commodities, Ripple is still in a grey area. One of the things that made Ripple go bearish in recent months is the fact that there are lawsuits claiming that the cryptocurrency is actually a security. These lawsuits are yet to be decided.