US lobby group blasts crypto-regulatory framework as ‘impractical’
An influential US lobby group has called for greater regulatory clarity on cryptocurrencies and the activities of the companies that develop and exchange them.
The US Chamber of Commerce has set out a new Fintech Innovation Initiative that urges regulatory authorities to help encourage the development of responsible crypto-based business models and other fintech innovations such as artificial intelligence and cloud computing.
Guidance on ICOs
On cryptocurrencies and blockchain, the Chamber said: “We urge the Securities and Exchange Commission (SEC) to give more guidance on the treatments of tokens and initial coin offerings to indicate whether a token is a security so companies can have more predictability and certainty in the marketplace.”
Indeed, both the SEC and the Commodity Futures Trading Commission (CFTC) have lacked clarity on cryptocurrency regulations, particularly the thorny issue of initial coin offerings.
Both authorities believe that many existing digital tokens, such as bitcoin and ether, are not securities and behave more like commodities and should, therefore come under the regulatory oversight of the CFTC – although the CFTC argues that it’s main regulatory responsibility is the oversight of the derivatives market, not the commodities that underpin it.
Both agree that most initial coin offerings should be treated as securities because their value is pinned to the profits of an underlying enterprise and, therefore, require registration with the SEC. However, there are exemptions and not all tokens are securities.
The Chamber, therefore, has recommended that regulators and other authorities “streamline the fragmented structure” of the currency regulatory framework.
“This conflicting patchwork has the potential to stifle innovation, limit market diversity and reach, and increase cost of credit that would impede growth and small business formation,” the Chamber said.
Its recommendations included a new framework where any “financial service provider that serves a national, multi-state market has one set of rules to abide by, instead of the complex state rules and multiple federal agencies”.
The lobby group blasted the current system as “convoluted” and “impractical”, but recognized that the financial technological landscape was advancing more quickly than regulatory authorities were able to react.
The Chamber of Commerce is one of the most powerful lobby groups in Washington DC and represents the interests of large corporations and small businesses. While other, more targeted, lobby groups exist, such as the Chamber of Digital Commerce and the Bitcoin Foundation, none match the political clout of the Chamber of Commerce.