With an international bitcoin craze up and running, Congress is taking a closer look at how it can gain better oversight procedures for an asset class that has come from nowhere. Support for the measure has the rare stamp of bipartisan approval.
“There’s no question about the fact that there is a need for a regulatory framework,” said Republican Senator Mike Rounds, a Senate Banking Committee member.
Cryptocurrency regulation today is something of a patchwork of regulatory oversight, as it is a duty shared by the SEC, CFTC (Commodity Futures Trading Commission), Treasury Department, the Federal Reserve and individual states. The result of the “everyone is responsible for bitcoin” structure of current regulation means that, in practice, no one is responsible for bitcoin — and speculative trading and investing has flourished in the legally grey environment.
Virtual currencies are not new, but the speculation in them is very new — and took off to an explosive degree in late 2017.
But the government is catching up with the issue — and deciding what agencies should be running point on the problem.
“The SEC is properly the lead on the issue,” said Republican Representative Bill Huizenga, chairman of the House Financial Services Subcommittee on Capital Markets, which will hold hearings on the issue in coming weeks. “Six months ago, we didn’t see this explosion. The marketplace has changed,” he said.
“We have to look carefully at all of the cryptocurrencies and make sure individuals don’t get taken advantage of,” said Representative Tom MacArthur, a House Financial Services Committee Republican.
The recent upswell of U.S. regulatory interest is of a piece with a similar surge of government interest in oversight worldwide. France and Germany want cryptocurrencies on the agenda for the upcoming G20 meeting of the largest advanced and developing economies. And even ultra-conservative Republicans like Representative Dave Brat, who generally frown on regulation, note that digital currency is a special case.
“I‘m a total free-marketer, so I don’t want to regulate,” said Brat, a member of the conservative House Freedom Caucus. “But if it’s a currency that could destabilize the whole economy, you’re going to have that conversation,” he said.
The question going forward, according to media reports, is how regulation should proceed in terms of how bitcoin and like digital currencies are classified — as securities or as commodities. That question is further complicated by the emergence of ICOs, or initial coin offerings, that have become a favored fundraising tool of startups in the last six months — despite complaints that ICOs look an awful like like securities offerings in everything but name.
Details aside, Democratic Senator Chris Van Hollen, a member of the Senate Banking Committee, said the bigger goal is to end the Wild West era of cryptocurrency trading.
“The goal here is to have rules of the road that protect consumers without trying to squash innovation.”