Cryptocurrency Regulation Cannot Be Decentralized, U.S. Regulators Say

Two members of the US authorities argued that cryptocurrency regulation cannot be decentralized. With this, the union of guidelines to regulate the sector should be adhered to in the country.

Since the cryptocurrency sector is new even to those who are fans of Bitcoin, there are many doubts about the technology and how it should be controlled by the state.

In any case, it is in the interests of the major world powers to create rules for the sector. In Brazil, for example, the National Congress has taken the lead and a bill has been introduced that requires cryptocurrency brokers to follow new rules defined by the Central Bank.

Still, there are several ways to take care of this situation and a union, if any, can make a difference.

Cryptocurrency Regulation Cannot Be Decentralized, U.S. Regulators Say

CFTC Commissioner Caroline Pham has teamed up with SEC Commissioner Hester Peirce to outline ways for the US to debate cryptocurrency regulation in a column on The Hill’s website. Pierce is known in the bitcoin community as “Crypto Mom”, for former market-friendly positions.

In the text released by the regulators, they make it clear that despite the decentralized nature of cryptocurrencies, regulation should not be like that. While the creation of rules by different authorities can bring benefits, it can involve risks without proper management.

†[D]ecentralized’ is also an apt description of the regulatory landscape for cryptocurrencies. Crypto has many genuine and ambitious regulators. Regulatory decentralization can have benefits, but if not managed properly, it can also exacerbate the already confusing lack of regulatory clarity surrounding cryptocurrencies. Cooperation between regulators is essential for strong, effective and pragmatic crypto regulation.”

They even defended that both the CFTC and SEC are coming together on the subject, indicating in the text signed by both that the situation is already starting to show results.

The first step could be cryptocurrency and stablecoin exchanges

Unlike the regulatory project set up in Brazil, the US proposal is that the rules be created between different institutions and with open participation by cryptocurrency users, investors and members of the industry in general.

†Crypto gives us another chance to collaborate and do this in public. As a first step, we are asking our agencies to conduct a series of public roundtables to review recent market events and risks and discuss how to regulate cryptocurrencies responsibly. These roundtables would be open to the public and panelists would include cryptocurrency users, investor and customer advocacy groups, industry insiders and other regulators.†

According to the commissioners of the CFTC and SEC (the US CVM), the aim would be to assess whether new regulations are really necessary. In addition, there could be a study to identify old rules that can be modernized to accommodate the new sector.

As for the first step, the commissioners believe it would be important to start looking at digital platforms, cryptocurrency derivatives, stablecoins and decentralized finance. Another point defended by regulators is that the rules should strike a balance between privacy and anti-money laundering measures.