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October 16, 2018

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A Possibly Optimistic Future for Crypto Regulation

A Possibly Optimistic Future for Crypto Regulation

 

          U.S. Regulators from the Commodity Futures Trading Commission and the Securities and Exchange Commission do not want to stifle crypto innovation. At least, that’s what an original report from this week’s Consensus Conference are saying.

 

        Several key figures from both organizations, as well as a U.S. deputy attorney general, spoke at the conference on Tuesday on a panel and made it clear that they aim to regulate the industry and the markets inside of it, but they do not aim to regulate Blockchain technology.

 

          Even so, Robert Cohen,  a Cyber Unit chief from the SEC, together with an enforcement director from the CFTC, apparently said that both agencies have an “open door” policy on ICOs. In the present moment, it can’t be said with certainty what this means.

 

          Judging by the facts that we have now, it could mean that they’re willing to give any crypto project a fair chance at being approved. On the other hand, with statements to the effect that the agencies always welcome “dialogue” with projects, this promise might be a bit more hollow than it seems. In other words, the degree of seriousness with which these agencies consider ICOs, is up in the air.

 

          Later on in the discussion, the same Cyber Unit chief seemed to clarify this by saying that if a crypto project “makes a good effort to comply with the law,” which includes being clear if its token offering is a security or not, then regulators will give them a fair shot.

 

          The question that lingers is: how do we really classify crypto assets as securities? Can we even use traditional terms when we’re aiming to find the place that they fit in the global financial market?

 

          Calling something a security isn’t exactly the same as simply terming it a currency or a store of value. Sources like the Strategic Coin blog state that if a coin or token gets its true value from an outside asset, then it is a security.  Other sources, like the department that regulates securities in Israel, have even gone so far as to say that there are no true currencies in crypto, but tokens can easily be defined as securities.

 

          Overall, it can reasonably said that we’re not out of the fog yet. Hopefully, any answer is just over the next horizon, or rather, just over the conclusion of the next major crypto conference.

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