Will U.S. Authorities Become More Lenient?
The relations between regulators and cryptocurrencies has been a bit of a shaky one at best. ICO's have been banned by the SEC back in 2018, the IRS has been clamping down on cryptocurrency traders, and smaller altcoins face the risk of being banned.
Many exchanges are either releasing a dedicated U.S. version to comply with regulations, like Binance. Others chose to close their gates to the U.S. clients like Poloniex.
"Fintech Regulation Needs More Principles, Not More Rules"
In what can be seen as a bit of a long-winded article, Tarbert outlines his opinions on regulations, fintech and cryptocurrencies. His opinion which echoes throughout the article is: more effective and accurate laws are required, not more laws.
"A more principles-based approach can help reduce the need for volumes of regulations that seek to dictate every aspect of a firm's behavior. As Winston Churchill put it, "If you make 10,000 regulations, you destroy all respect for the law." Yet Titles 12 and 17 of the U.S. Code of Federal Regulations - which together cover banking, securities, and derivatives regulation - now total over 13,000 pages."
It seems that the CFTC Chairman understands that the sheer amount of laws and regulations is ineffective. Over he later goes on to state that strong core principles are a better way to govern.
CFTC Chairman Heath Tarbert
"But overall, CFTC staff is currently considering how the core principles applicable to exchanges (venues where derivatives trades are executed) and clearinghouses (entities that take on and manage the post-trade counterparty credit risk) can be better tailored for fintech.
For instance, core principles have been central to our evaluation of clearinghouses that would clear derivatives resulting in delivery of Bitcoin. Digital assets face the unique operational risk of a systems hack that could result in loss or theft. Our core principles include a requirement that clearinghouses have systems to identify and minimize operational risk. The CFTC does not have formulaic, prescriptive rules laying out what systems are required. The agency also does not spell out how operational risk must be allocated between clearinghouses and its members and customers. Yet derivatives clearinghouses are anything but lightly regulated."
Is the CFTC Changing its Tune?
It appears that a more principled approach might benefit the cryptocurrency industry. The massive number of rules, regulations and red tape required to open a cryptocurrency related business in the United States could be halting progress.
All things considered, this is good news for Bitcoin and cryptocurrencies.
Written by Jonathan Ganor
Writer & cryptocurrency aficionado