U.S. Regulators Calls For Balance Rules on Cryptocurrencies, Suggests ‘Do No Harm’ Policy

New Fed Chair Takes His Seat; Crypto Players Await His Moves on Space

In a crucial show of support to the nascent and struggling blockchain technology, U.S. market regulator Commodity Futures Trading Commission (CFTC) on Monday said a “responsible regulatory response” is needed to regulate cryptocurrencies instead of stringent rules.

Inwritten testimonypresented before the Senate Banking Committee, CFTC Chairman J. Christopher Giancarlo has proposed a "do no harm" registration management of distributed ledger and cryptocurrency startups and companies.

“We are entering a new digital era in world financial markets. As we saw with the development of the Internet, we cannot put the technology genie back in the bottle. Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”

According to Giancarlo, the evolution of digital currencies as an asset class, as well their volatility, including the amount of interest the technology attracts from the millennial population across the globe, indeed “demand serious examination.”

However, with the “proper balance of sound policy, regulatory oversight and private sector innovation," the new technologies will be beneficial to the general public and will allow the American markets to further evolve in responsible ways that allow economic growth and prosperity.

The 42-page document submitted by Giancarlo to the Senate appears to be giving support to virtual currencies and its underlying technology, the blockchain. It also compared the rise in blockchain interest to the dot.com era in the 1990s.

Giancarlo added, "'Do no harm' was unquestionably the right approach to the development of the internet. Similarly, I believe that 'do no harm' is the right overarching approach for distributed ledger technology."

Bitcoin Futures Contracts are Solid

In December, the CFTC found that Bitcoin futures contracts are solid as the regulator allowed the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) to offer Bitcoin futures contracts.

The CFTC indicated that by signing off the contracts as solid, it had taken into consideration valid concerns by industry players. The agency is also in extensive talks with the exchanges, which led to ground rules being laid.

Bad Actors Taking Advantage of Cryptocurrency Space

In his note, Giancarlo admitted that there are bad actors who are taking advantage of the cryptocurrency space aside from several outstanding issues that need to be addressed.

"Indeed, history has demonstrated to us time, and again that bad actors will try to invoke the concept of innovation in order to perpetrate age-old fraudulent schemes on the public.”

The CFTC recently broke apart a scheme called My Big Coin, which solicited large personal investments with promises of a unique digital asset linked to a debit card. The funds raised were spent on personal luxuries of the project’s founders, and not on any actual digital asset.