By Bill Taylor/Managing Editor – So, the philosophical question pops up again: “What is Bitcoin?” Answer? According to a recent speech by Chairman J. Christopher Giancarlo, head of the CFTC, it’s a bit of this, and a bit of that. Its part currency, part security and part digital coin.
Bitcoin especially, and many other virtual currencies as well, includes elements of all the other different asset classes including payments, long term assets and even commodities. The one thing Chairman Giancarlo nails for certain is that Bitcoin is brand new, being just under ten years old. And “discovered” by regulators only recently.
With U.S. regulators just now “discovering” cryptocurrencies the debate among them is not only HOW to regulate cryptos but also WHO should regulate them. By the way, this is a recurring theme every time a new asset class appears. The regulatory turf war begins and innovation stalls while countries around the globe leap ahead of the U.S and become established. Ah, but I digress. At least the CFTC has established itself as the “bitcoin regulator” and considers certain aspects of bitcoin to be an asset like gold. A digital gold. Chairman Giancarlo also muses that bitcoin may be better suited to a long term buy and hold strategy rather than form of payment.
Now, here comes the tricky part. While many “newer” countries (Korea, Japan, Singapore, Gibraltar, etc) have developed regulatory legislation and infrastructure from scratch, the U.S regulators have ‘ancient” rules. The CFTC and the Securities Exchange Commission (SEC) were established in the 1930s and the same rules just don’t apply. Our regulators don’t know what box to put the “new” assets in. Perhaps starting from scratch with a new authority (Crypto Exchange Commission…..CEC?) and taking the best of other country’s regulations would speed things up? I like it.
BUT, here’s the bad news and why it will be a very long time until the U.S enters the “new digital asset/crypto age”. Before anything gets going the U.S. Congress must decide any new polices and how they should evolve. A helpless sigh is heard in America, laughter is heard in other parts of the world.