States Take Regulation Of Cryptocurrency In Their Own Hands, As US Federal Government Focuses On Blockchain Technology
The regulation of cryptocurrency has been an ongoing problem for the United States (US). They have managed to outline particular processes involved with blockchain technology and have many trials that examine the way that it works in their industries. However, the fact that even government authorities have different classifications for the same token groups makes it hard to know how to handle them.
As a result of the confusion, any states are working to become the friendliest places for cryptocurrency. Ohio even made an announcement recently that they would allow their residents to cover taxes with the use of crypto payments. In the meantime, the authorities are still in a state of confusion with defining and regulating the assets that clearly are in demand for residents.
The ones making the most noise about the lack of organization of the federal policies aren’t stakeholders or even enthusiasts; these concerns also involve academics. Carol Goforth, a professor at the University of Arkansas, recently noted that there are presently four different regulators within the federal government that oversee how digital assets are dealt with, from their categorization to their issuance, and further. These four entities are the:
Commodity Futures Trading Commission (CFTC)
Securities and Exchange Commission (SEC)
Financial Crimes Enforcement Network (FinCEN)
Internal Revenue Service (IRS)
The CFTC sees crypto assets as commodities, though the IRS shares a similar view in calling them property. The FinCen, which is run by the Treasury Department, regulates them with the same rules as fiat currency, but the SEC sees them much differently as securities.
Professor Goforth expressed her skepticism that the regulatory entities would work together anytime soon, leading her to encourage the coordination between them for a more nuanced approach. As she puts it, her version of the rules would force the federal government to deal with each cryptocurrency as it is introduced, specifically identifying them by their functionality and the motivations of users.
This is a path that at least one instance shows is happening within the federal regulators. The CFTC publicly requested details on the functionality of Ether and the Ethereum Network on December 11th. The document has 25 different questions that deal with the platforms purpose, functionality, scalability, and more.
However, the effort to address a single asset by the CFTC isn’t necessarily a sign that the industry is turning towards the idea that the professor had in mind. None of the other regulators have taking this move and are holding on to the regulatory measures that they already have in line. Still, there’s always a chance that congressional legislators will make some changes in their framework.
Darren Soto and Ted Budd, who are both US Representatives, brought in two bills on December 6th that will help with the improvement of regulatory framework and reduce the risk of price manipulation. These bills are called the Virtual Currency Consumer Protection Act of 2018 and the U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018, respectively.
These two bills offer specific regulatory changes that could be made for the process to be smoother for exchanges, users, and everyone else involved. The first bill discusses that many situations that can arise in the market for price manipulation. The other requests an in-depth study that aims to improve the “burdensome regulations that may inhibit innovation.”
Warren Davidson, the representative of Ohio, spoke at a conference in Cleveland where he noted his intent to bring in a new bill that would create a new asset class for tokens. As such, the regulation of initial coin offerings (ICOs) would become significantly less difficult. A week later, Davidson suggested a crowdfunding event to help with the creation of the US-Mexico border wall, which would include the use of blockchain and “wall coins.”
Even though there appears to be a significant lack of clear regulations regarding cryptocurrency, blockchain technology is already being applied to daily operations. The use of this ledger with supply chain logistics is easily its biggest application, and federal authorities are looking to use it for food safety as well, especially considering the recent E. coli outbreak.
The Department of Homeland Security announced their intention to use the technology as a way to protect their own activities. Their three subsidiaries are working together for a clear record of documentation that will help with fraud, counterfeiting, and forgery.
The defense authorities for the federal government recently established an app that would help the members of the armed forced to learn how to use blockchain technology for the supply chain as well.