After probing into Facebook’s Libra and its prospect of becoming a global digital currency, U.S. lawmakers are now bringing their attention to the broader cryptocurrency world. The United States is now set to hold hearings regarding crypto and blockchain next week. In the official announcement made, the date set for the hearing “Examining Regulatory Frameworks for Digital Currencies and Blockchain” is July 30th, 2019.
As an expert witness, Circle’s CEO Jeremy Allaire will represent the Blockchain Association. An opinion from someone linked to the crypto-financial services provider Circle will be interesting as recently the project’s team decided to shift the activities of its exchange outside of the U.S. due to lack regulatory clarity.
The team at @circlepay finally decided the lack of clarity in US regulations was too much of a burden and they are moving the operations of their crypto exchange outside the US.
Outdated regulations are killing innovation and our loss is another country’s gain 🤷🏽♂️
— Pomp 🌪 (@APompliano) July 23, 2019
In addition, witnesses include Rebecca Nelson who is a part of Congressional Research Service with expertise in the area of international trade and finance. Mehrsa Baradaran, a law professor at the University of California Irvine School of Law will also be at the hearing testifying as an expert witness.
A good mix of witnesses will make sure that the issue of crypto regulation is tackled from all ends and not just from one perspective. The live streaming of the hearing will give one a clear idea of how much progress the Senate committee has made regarding the understanding of cryptocurrencies and blockchain so far.
Just recently, a number of hearings were held by the same committee for understanding the workflow of the social media giant Facebook’s ambitious crypto project Libra. The goal of these hearings was to map out the regulatory restrictions under which Facebook’s Libra has to fall. Up until now, it seems that the lawmakers do not trust Facebook running the global financial system of money.
The dependencies and the need of centralization that arises from curbing illegal activities make it difficult to map out concrete regulatory plans for Facebook. There is a trade-off between the decentralization and centralization that Facebook has to make.
For the rest of the crypto world and especially bitcoin, lack of regulatory clarity is something that is posing a serious bottleneck towards its global adoption. The essential goal of the lawmakers is simple, protect the investors and eliminate all the negative usage of cryptocurrencies.
Since bitcoin is a technological innovation, the lack of concrete regulation allowed for many illegal activities such as money laundering to seep into this space. Cryptocurrencies are also major instrument being used for payments in illegal online marketplaces such as the dark web.
The major connotation that has made its place around cryptos is largely negative. Some media coverage of bitcoin includes a slight dismissive touch regarding the asset. The major reason behind this is the uncertain behavior that this digital asset shows in terms of its price. But since this innovation is just a decade old and is already posed against the well-established system of banking, implementation of regulation and future developments are expected to make it more mature. Regulations have to play their part in opening up the bitcoin world to big financial institutions and corporations for broader acceptance.
For blockchain technology, regulatory clarity will only usher a better ecosystem. Blockchain has emerged as the technology of the future. The game-changing features that this tech puts forward in the form of decentralization, immutability, trustlessness, and transparency are of supreme importance in the finance industry. Already a lot of intellectual and cash capital is flowing into this tech and with regulations in the picture, various projects will start the utilization of this tech with much relief from an official standpoint.
All in all, it is about time the crypto and blockchain world stepped out of its regulatory troubles. The U.S. would certainly not want crypto projects to move their operations out of the country due to lack of regulation as they are likely to play a big and influential role in the global economy of the future.
The need, however, for the Senate Banking Committee is to tread carefully. Too many restrictions pose a risk of damping down innovation in this space. Devising out a perfect regulatory plan is a tedious task in front of the committee, the upcoming hearing will give us a clear picture regarding the standing of cryptocurrencies and blockchain in official eyes.