Testimony from CFTC and SEC chairs on digital currencies and Blockchain
The Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) discussed their roles in digital currencies, Blockchain, and ICOs to the Committee on Banking, Housing, and Urban Affairs in an open session on Tuesday that lasted for around 2 hours.
The Senate Banking Committee heard testimony from the chairman of the CFTC, Christopher Giancarlo, and SEC chairman Jay Clayton.
When questioned about the value of Blockchain, the underlying technology of Bitcoin, Giancarlo said:
“It’s important to remember that if there were no Bitcoin, there would be no distributed ledger technology,”
“Sixty-six million tons of American soybeans were just handled through a blockchain transaction by the Dreyfus company to China. So Bitcoin is now being used, it’s being used in our American transportation and logistics system,” Giancarlo added.
“I think this distributed ledger technology has enormous potential. Now how it will be realized, when it will be realized are challenges, and those we can’t say.”
Distributed ledger technology is an electronic (digital) system for recording asset transactions. All the data for each transaction is recorded in several different places at the same time.
Senator Mike Rounds asked Giancarlo whether bitcoin is a commodity, a security or both. Giancarlo said that bitcoin has features of different asset classes, but when looked at as a store of value it behaves “very much like a commodity.”
”If you go on to the Twitter universe, you will see the phrase ‘H-O-D-L,’ meaning hold on for dear life, meaning they buy it and hold it,” he said. Giancarlo also revealed that his niece is a bitcoin hodl-er.
Giancarlo believes cryptocurrencies will “likely require more attentive regulatory oversight” in regard to “fraud and manipulation.”
“We intend to be very aggressive, if nothing else, so that people like my niece can have some security that there aren’t fraudsters and manipulators out there—and there are a lot, too many, far too many of them,” Giancarlo said.
Jay Clayton, the chairman of the SEC, voiced his concerns about fraudsters preying on the enthusiasm of investors wanting to profit from a piece of a new technology and how they deserve the full protections of federal securities laws.
“To be clear, I am very optimistic that developments in financial technology will help facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From a financial regulatory perspective, these developments may enable us to better monitor transactions, holdings and obligations (including credit exposures) and other activities and characteristics of our markets, thereby facilitating our regulatory mission, including, importantly, investor protection,” Clayton said.
“At the same time, regardless of the promise of this technology, those who invest their hard-earned money in opportunities that fall within the scope of the federal securities laws deserve the full protections afforded under those laws. This ever-present need comes into focus when enthusiasm for obtaining a profitable piece of a new technology “before it’s too late” is strong and broad. Fraudsters and other bad actors prey on this enthusiasm,” he added.
A blockchain is an ultra-secure list of record (blocks) that is continuously expanding. Blockchain technology is extremely efficient.