On Thursday, Dec 13, 2018, Congress plans to finally address the financial elephant in its legislative chambers by introducing two bills intended to guard consumers against fraud while ensuring the United States remains relevant in the blockchain and digital asset space.
These bills enter an oddly regulated space, with Bitcoin (BTC) and Etherereum (ETH) overseen by one agency, the Commodity Futures Trading Commission, or CFTC. All other cryptocurrencies, including altcoins, stablecoins, and other platforms beyond BTC and ETH, are regulated by the Securities and Exchange Commission (SEC).
Congress seems to be getting more serious about cryptocurrency..
Scoop: Bipartisan lawmakers are planning to introduce #cryptocurrency bills on Thursday to protect consumers and keep the U.S. competitive https://t.co/V2aw2KQnIc
— Kate Rooney (@Kr00ney) December 6, 2018
Cryptocurrency really caught the attention of US lawmakers in 2017 when a fundraising method called an Initial Coin Offering (ICO) became prolific amongst crypto start-ups. The problem was that ICOs started to look an awful lot like security futures — but they were entirely unregulated.
The SEC was established to ensure the 1934 Securities and Exchange Act was enforced. This law was passed following the 1929 stock market crash, when lawmakers realized that securities markets in the U.S. were entirely unregulated. It was an effort to regain the public’s trust and confidence, bolstering the economic recovery.
ICO vs. IPO
A big part of what the SEC regulates in traditional finance is Initial Public Offerings (IPOs). ICOs are wildly similar, with the blockchain aspect of things being the only real difference.
As ICOs became more popular, some inevitably turned out to be failures or even frauds. Investors were losing millions. This is what caught the SEC’s attention.
One of the bills to be introduced this week in Congress is the “Virtual Currency Consumer Protection Act.” This law would establish a report regarding cryptocurrency price manipulation and its potential effects on the U.S. economy.
The other bill is called the “U.S. Virtual Currency Market and Regulatory Competitiveness Act.” This legislation was written to ensure competitive success in the global blockchain market. It provides direction for the CFTC to study regulatory laws surrounding cryptocurrency in other countries, then makes recommendations on future U.S. regulatory standards based on the findings.
These bills are likely the first in a long line of crypto-centric legislation to go through Congress in coming months. Cryptocurrency in the U.S. is already poised for changes in regulatory status. It will be intriguing to see how both consumers and the industry as a whole react to these first steps.
Think this is just the first of many government controls in the US? Let us know in the comments below!