CFTC to Take ‘Do No Harm’ Approach to Cryptocurrency Regulation

Bitcoin jumped almost 10 percent after it began trading on the world's biggest futures exc
AFP
Tom Ciccotta

Commodity Futures Trading Commission Chairman J. Christopher Giancarlo has announced that he will take a “do no harm” approach to cryptocurrency regulation.

In a written testimony that was published ahead of a Tuesday hearing,Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo explained his regulatory plans for the cryptocurrency space.

‘Do no harm’ was unquestionably the right approach to development of the Internet. Similarly, I believe that ‘do no harm’ is the right overarching approach for distributed ledger technology. … With the proper balance of sound policy, regulatory oversight and private sector innovation, new technologies will allow American markets to evolve in responsible ways and continue to grow our economy and increase prosperity.

Speaking about blockchain systems broadly, Chairman Giancarlo argued that the emerging technology will have a lasting impact on global financial markets.

“DLT [Distributed Ledger Technology] is likely to have a broad and lasting impact on global financial markets in payments, banking, securities settlement, title recording, cyber security and trade reporting and analysis,” the testimony reads. “When tied to virtual currencies, this technology aims to serve as a new store of value, facilitate secure payments, enable asset transfers, and power new applications.”

Giancarlo’s testimony document concluded with a warning about the decentralized and volatile nature of virtual currencies. The document makes note that virtual currencies are “not currently backed nor supported by any government or central bank.”

Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Virtual currencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional fiat currencies.

During Tuesday’s hearing, Giancarlo expanded upon the prepared testimony. “We owe it to this new generation to respect their interest in this new technology with a thoughtful regulatory approach,” he said.

Twitters reactions to Giancarlo’s remarks were largely positive on Tuesday morning.

 

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