Cardano (ADA) blockchain and Input-Output Hong Kong (IOHK) co-founder Charles Hoskinson expressed before the U.S. Congress that cryptocurrency regulation must be established, but monitoring compliance should be decentralized.
Cardano Founder Pitches To The U.S. Congress That Regulation Is Better If Without Government Involvement
According to Hoskinson in his pitch to the U.S. Congress, the ideal structure for regulations in the crypto space must be more focused on financial self-regulation. He told the lawmakers that it is neither the U.S. Securities and Exchange Commission (SEC) nor the Commodity Futures Trading Commission (CFTC) that does the necessary due diligence measures.
According to Hoskinson, 'know your client,' and banks and not government authorities pursue anti-money laundering (KYC-AML) standards. He noted that the same concept could be applied to monitor and regulate cryptocurrency and blockchain-based firms more effectively and reliably.
"It's a public-private partnership. What needs to be done is to establish those boundaries, then what we can do as innovators is write software to help make that happen," Hoskinson said.
Hoskinson's point is a direct response to calls for the U.S. SEC and the CFTC to place cryptocurrency and blockchain-based firms under their regulatory purview. Both of these financial authorities are currently running as crypto business regulators.
Lawmakers Agree That SEC and CFTC Do Not Have Enough Resources To Regulate All Crypto
Representative Austin Scott of Georgia expressed a seemingly supportive stance on Hoskinson's position. Rep. Scott shared that neither the SEC nor the CFTC has the resources to supervise the hundreds of cryptocurrencies on the market. The solon also added that "it is not practical to regulate all of these currencies," pointing back to the premise that the government should not be doing the regulatory responsibilities in the crypto space.
Hoskinson agrees. He added that the ability of cryptocurrencies to store and transfer data also means that they can already perform much of the much-needed regulatory work with full automation and without any third-party intervention. He also used it to justify allowing the crypto industry to create self-regulating organizations (SRO) to guide regulatory compliance as the private banking industry does.
Hoskinson proposed that the industry develop a "self-certification system" that would automatically monitor compliance until an abnormality was discovered, at which time a financial authority would review it. Hoskinson theorized that even quadrupling the Internal Revenue Service's (IRS) capacity would not be enough to audit every American, demonstrating why manpower should not be an issue for crypto regulation.
Hoskinson's Thursday testimonial, published on the Input Output Hong Kong website, demonstrated that he was eager to collaborate with federal regulators on developing new rules, stating that compliance with U.S. regulations and legislation "must be a guiding value for the blockchain industry."
Hoskinson's calls for clearer limits in the crypto regulatory landscape reflect those expressed by other industry insiders last December in the United States. SEC Commissioner Hester Peirce recently attributed the SEC's refusal to establish spot Bitcoin exchange-traded funds (ETFs) in the United States to a lack of regulatory clarity.
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