Charles Hoskinson, the creator of Cardano and a co-founder of Ethereum, has recommended to the US Congress a different strategy for regulating cryptocurrencies and activities related to them. The suggested strategy incorporates principles based on software.
Charles Hoskinson thinks that self-regulation through crypto technology is possible.
Hoskinson suggested that the software developers associated with the various crypto projects in question handle compliance checks and other procedures when speaking on cryptocurrencies and blockchain technology on Thursday during a congressional session.
He recommended modelling the regulatory and compliance process for cryptocurrencies after the self-regulation pattern seen in the banking industry. He feels that, like banks, exchanges should be permitted to create and manage these KYC-AML processes.
“It’s not the SEC or CFTC going out there doing KYC-AML; it’s banks. They are the ones in the frontline,” said Hoskinson. Further noting, “it’s a public-private partnership. What needs to be done is to establish those boundaries, then what we can do as innovators is write software to help make that happen.”
This proposal comes at a good time, especially in light of the fact that the US Congress is now searching for the best regulatory structure for the cryptocurrency industry as widespread usage seems to be increasing quickly.
According to Charles Hoskinson, since cryptographic technology can store and transmit user data, regulatory functions can as well be automated by industry developers to mimic the banking industry.
Hoskinson’s proposal is ideal given the conflict between the SEC and CFTC.
The American entrepreneur, who is 34 years old, noted that this pattern would provide openness and efficacy when it comes to crypto rules and compliance processes and would help in reducing the unhealthy competition that results from many authorities vying to control the market.
Evidently, Hoskinson was alluding to the conflict between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) over control of cryptocurrency rules (SEC).
In a tweet from August of last year, former CFTC Commissioner and American financial manager Brian Quintenz stated that the SEC had no jurisdiction over pure commodities like gold, wheat, or cryptocurrencies. Additionally, former CFTC Commissioner Christopher Giancarlo pointed out that only the CFTC had experience with crypto regulation.
Hoskinson’s recommendation seems to be the best course of action for crypto regulations, especially in light of the numerous lawsuits the SEC has brought against cryptocurrency projects and the complaints made by certain crypto enterprises against the US regulator’s unreasonable limits.
Source: Zycrypto