- Charles Hoskinson has told Congress that it should make rules for cryptocurrency but leave enforcement to the software developers.
- Hoskinson feels regulations for the crypto industry should be defined better.
- Hoskinson feels compliance should come from the industry itself, not from regulatory authorities.
Cardano co-founder Charles Hoskinson has testified in front of the US Congress about cryptocurrency regulation. He explained to representatives why he thinks transparency is an important value in the industry.
The idea, as explained by Hoskinson, is that crypto regulation should follow the model of bank self-regulation. During a June 23 congressional hearing, he compared the ideal system for crypto regulation to that of banking self-regulation, telling lawmakers “it’s not the SEC or CFTC going out there doing KYC/AML; it’s banks. They are the ones on the front line.”
Hoskinson continued, saying that in the same way, “the exchanges are going to be the ones who are doing KYC/AML” for cryptocurrency. He added that self-regulation would help ensure that the industry is “following best practices” and would be more effective than “a bunch of different agencies” trying to regulate the space.
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are two of the financial regulators squabbling over authority in the cryptocurrency space.
Hoskinson’s testimony comes as Congress is considering how to approach regulation of the cryptocurrency industry. The hearings are part of an effort by lawmakers to understand the technology and its implications for investors, consumers, and the financial system.
Hoskinson told the commission that because cryptocurrencies can store and transmit data, they could perform much of this regulatory function automatically. He also cited it as a reason to allow the crypto sector to create self-regulatory organizations (SRO) like the private banking industry, which serves as a model for regulation compliance.
According to a June 23 testimonial by Hoskinson published on the IOHK website, he was interested in collaborating with federal regulators to create new regulations. “Compliance with regulation and legislation coming out of the United States must be a driving value for the blockchain industry.
Hoskinson’s pleas for clearer boundaries in the crypto regulatory environment reflect those made by other industry figures in the United States. In December last year, SEC Commissioner Hester Peirce said that a lack of regulatory clarity was responsible for the SEC continually rejecting spot Bitcoin ETFs from coming to market in the United States. Peirce expressed that the Bank of New York Mellon’s (BNY Mellon (NYSE:BK)) crypto plans make it more pressing for US regulators to take action in getting more clarity.