Cardano’s founder and co-founder of Ethereum, Charles Hoskinson has suggested a different approach to the regulation of cryptocurrencies and crypto-related activities to the US Congress. The proposed approach involves software-based precepts.
Hoskinson believes crypto technology can perform self-regulation
Speaking on cryptocurrencies and blockchain technology in a congressional hearing on Thursday, Hoskinson proposed that compliance exercises and measures be left to the software developers affiliated with the respective crypto projects involved.
He suggested that the regulation and compliance exercise involving cryptocurrencies emulate the fashion of the self-regulation pattern typical in the banking sector. According to him, exchanges should be allowed to design and maintain these KYC-AML exercises just like banks.
“It’s not the SEC or CFTC going out there doing KYC-AML; it’s banks. They are the ones in the frontline,” said Hoskinson. Further noting, “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.”
This proposition comes at an opportune time especially considering how the US Congress is currently looking for the ideal pattern of regulation for the crypto industry as public adoption appears to grow at a rapid rate.
According to Hoskinson, due to the ability of crypto technology to store and transmit user data, regulatory functions could as well be automated by developers within the space to follow the model of the banking sector.
The battle between SEC and CFTC makes Hoskinson’s proposition ideal
The 34-year-old American entrepreneur pointed out that this pattern would help ensure transparency and effectiveness when it concerns crypto regulations and compliance practices and would help in eliminating the unhealthy competition that comes from different bodies struggling to regulate the industry.
Hoskinson was apparently making reference to the battle of supremacy with regard to crypto regulations between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
In August of last year, American financial manager – now-former Commissioner of CFTC – Brian Quintenz, in a tweet, argued that the SEC had no authority over pure commodities like gold, wheat, or cryptocurrencies. Furthermore, Christopher Giancarlo, also former Commissioner of CFTC, noted that only the CFTC had experience with regulating crypto.
Considering the series of lawsuits filed by the SEC against crypto projects with some crypto firms complaining of illogical restrictions by the US regulator, Hoskinson’s suggestion appears to be the ideal go-to for crypto regulations.
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