Following the CFTC’s request for feedback in order to better inform the Commission’s understanding of the market for, and technology behind crypto-currencies, Gavin Smith, CEO at Panxora, says he’s quite unhappy with the current US regulatory model.
Although he’s pleased that the US is looking for more insight, Smith thinks the regulatory model makes life difficult for crypto companies, even if they’re not based in the US. He argues that if overseas regulators don’t take action soon they could risk losing control of crypto entirely to the US.
“While it’s a welcome move forward for the US to provide clarity, overseas regulators need to be more proactive or risk losing control of this exciting new asset entirely to the United States.
“US authorities are controlling the development of cryptocurrency globally by imposing draconian fines and sometimes criminal proceedings on companies. This can apply regardless of whether businesses are legally operating in their own jurisdictions.
“This is worrying for companies operating outside of the US, as you could create a business that is perfectly legal in your own jurisdiction, but still risks prosecution by the US Federal Government. Until sovereign governments take a stand to protect businesses operating within their borders, the US is being handed unchecked power in controlling the development of the crypto-economy.”
“It’s good to see regulators call for more insight into cryptocurrencies. If crypto is ever going to be accepted into the mainstream, regulation is essential.
“However, the moves that US regulators have already made leave something to be desired. Ioin the requirements are so heavy handed that it is practically impossible to use crypto for what it was intended as: a viable alternative to traditional currency. It’s highly unlikely that anyone would buy a coffee or a T-shirt with crypto if they had to verify their identity every time they wanted to make a purchase. In the US, regulators now classify all tokens as securities – regardless of purpose.
“This creates an uneven playing field where companies in the US, correctly regulated are free to operate globally but correctly regulated overseas companies do not gain reciprocal access to US markets. While it’s a welcome move forward for the US to provide clarity, overseas regulators need to be more proactive or risk ceding control of this exciting new asset entirely to the United States.”