Sam Bankman-Fried recently called on the US to provide cryptocurrency oversight rather than staying on the sidelines. And even if regulations hit legislative snags, it would still help to lay out a road map and expand crypto education, he said. Two experts shared their perspectives for what’s to come for digital asset regulations. Loading Something is loading.
FTX founder and CEO Sam Bankman-Fried said the US should step up as a leader in cryptocurrency regulation and provide safeguards for digital asset investors.
In a Thursday interview with the Economic Club of New York, the 29-year-old crypto billionaire clarified his vision for government involvement with crypto rules, saying “America should provide oversight rather than sitting on the sideline.”
“[The US should] be able to strike a balance between fostering economic growth and providing consumer protection and protecting against systemic risk and financial crimes,” Bankman-Fried said.
He acknowledged that the legislative progress in any sector is currently difficult, but said he would like to see regulatory plans mapped out even if a new law can’t happen.
Among possible regulatory moves, Bankman-Fried suggested a registration system for tokens and stablecoins. He also pointed to the need for clearer market oversight, namely, greater clarity over which regulator is responsible.
Others have also called on the federal government to designate a top regulator as officials from the Securities and Exchange Commission, Commodity Futures Trading Commission, and Treasury Department have all signaled intentions to take on crypto rulemaking.
But the regulatory side is only part of the puzzle, said Bankman-Fried, as more education is needed across the board.
That sentiment was echoed by Eric Young, senior managing director of compliance at security firm Guidepost Solutions.
Over the next two years, he expects to see the need for regulation intensify as well as a simultaneous “race to educate,” which will help investors and regulators differentiate between and understand the growing number of digital assets.
The recent seizure of $3.6 billion and arrests over an alleged money-laundering scheme linked to the 2016 hack of crypto exchange Bitfinex also underscored the need.
“Whether in the US or globally, there will be another major crypto scandal or loss, leading to a further acceleration of the ‘race to regulate’ digital assets,” Young told Insider.
Tally Greenberg, head of business development at staking provider Allnodes, agreed and said the regulatory progress must start with giving more concrete definitions of assets, who is looking to regulate them, and for what purpose.
She noted that the IRS, for example, does not consider cryptocurrencies as legal tender and taxes them as property. The Financial Crimes Enforcement Network, on the other hand, calls them a currency substitute but also stops short of treated them as legal tender.
“Without proper definitions, a smart contract written in code may or may not be enforceable,” Greenberg said, adding that “an NFT may or may not be a property, and the confusion will ensue.”
To help prevent investors from making risky crypto bets, she proposed that a regulator like the SEC could establish a standard for financial institutions to follow when assessing investments.
“But at the same time, devising such legislation must be carefully thought through,” Greenberg said. “After all, it is an unprecedented attempt at regulating a network of self-regulating people.”