Cardano co-founder Charles Hoskinson told Congress he should set regulations for crypto but leave compliance to software developers.
Hoskinson compared the ideal arrangement for crypto regulation to how banking self-regulation works during a June 23 congressional hearing, telling lawmakers “it’s not the SEC or the CFTC that does KYC-AML. , it’s the banks”.
“It’s a public-private partnership. What you have to do is set those boundaries, and then what we can do as innovators is write software to help get there.
The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) are two of the financial regulators vying for jurisdiction over the crypto industry.
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Republican Rep. Austin Scott of Georgia claimed neither the SEC nor the CFTC had the manpower to oversee the thousands of cryptocurrencies in the market, saying “it’s not possible to regulate all of these currencies.” .
Hoskinson responded that the ability of cryptocurrencies to store and transfer data meant they could do much of this regulatory work automatically. He also used it as justification for allowing the crypto industry to create self-regulatory organizations (SROs) to guide regulatory compliance, as the private banking industry does.
Hoskinson suggested the industry could create a “self-certification system” that could automatically monitor compliance until an anomaly is found, at which point a financial authority would review it.
Further illustrating why labor should not be a concern for crypto regulation, Hoskinson speculated that even quadrupling the size of the Internal Revenue Service (IRS) would not be enough to audit every American. .
Instead, Hoskinson told Rep. Scott that cryptocurrencies can be programmed to prevent settlements of transactions until legally mandated checks are completed.
Hoskinson’s June 23 testimony posted on the IOHK website demonstrated his willingness to work with federal regulators on developing new rules, stating that compliance with regulations and legislation from of the United States “must be a guiding value for the blockchain industry”.
“However, this is a new technology and a radically new asset class that cannot easily adapt to the limitations of laws and tests created nearly a century ago.”
Hoskinson’s calls for clearer boundaries in the crypto regulatory landscape echo those made by other industry insiders in the United States last December. SEC Commissioner Hester Peirce recently blamed the lack of regulatory clarity in part on the fact that the SEC has consistently rejected the launch of spot Bitcoin exchange-traded funds (ETFs) in the United States.