Coinbase instead insisted that greater coordination among regulators and communication with consumers is needed. Mike Lempres, the chief legal and risk officer at Coinbase detailed how each agency sees cryptocurrencies “through their own lens.” He called out the fact that the “SEC says [cryptocurrencies are] assets, particularly ICO’s, are probably securities; the CFTC says tokens are commodities, unless they are securities; the IRS says they are property; FinCEN says tokens are money”. In his testimony, Lempres related this to the parable of the “three blind mice and the elephant”, although he probably meant the three blind men and the elephant, whom each of the three inspected the large elephant from such a narrow view that they all mistook the animal for something other than an elephant. He said it is important for exchanges and consumers to know where one regulatory authority ends and another begins.
Lempres went on to discuss how Coinbase is “studiously avoiding listing tokens that could be determined to be securities because we are not currently licensed to trade securities and cannot take the risk.” Lawmakers took a less optimistic view with Democratic Rep. Brad Sherman calling cryptocurrencies a scam and Republican Rep. Bill Huizenga saying congress would act if investors needed protection.
Regulator interests to be satisfied
The comments from Lempres brings to light the fact that each governmental regulatory agency has their own interests to satisfy by regulating cryptocurrencies in a way that makes their agency the relevant party. Each agency and lawmaker claims it is in their interest to protect consumers, which may be true, but each agency and lawmaker can also demand more funding as their tasks increase. Competition within the government can be seen as good or bad depending on various circumstances and each brings possible consequences.
Regulatory competition could have the negative effect that Lempres touched on with the three blind men and the elephant parable since each agency will end up focusing on a little section on cryptocurrencies and give a wrong diagnosis. The wrong diagnosis could lead to excessive and confusing regulations that stall innovation in the space. On the other hand, there could be a positive effect since the competing agencies and regulations could lead to a discovery of the best form of regulation through competition. This is less likely to occur at the federal level since the laws have a national affect, but Coinbase is subject to different licensing requirements in 38 US states. As different states attract more or less cryptocurrency business, the best regulations that are not too burdensome will be revealed. A good example of the effects of a too stringent cryptocurrency law was the mass exodus from NYC after the implementation of the Bitlicense, which is currently under pressure to be reformed.
All these regulations are pitched as solutions to help protect people, so if a better way to protect people is found then this new method should not be ignored.
Dash can self implement operational principals
Dash occupies a unique position in the cryptocurrency space with its governance and treasury system that is checked via economic incentives. Every Dash that is mined is distributed among miners, masternodes, and the treasury fund. The masternodes vote on how to allocate funds from the treasury to better the network, which the masternodes have a large economic and financial stake in to satisfy consumers so the value of Dash, and thus their investment, is maintained. This system has a unique check-and-balance system to ensure Dash consumers remain happy, which can be seen as a form of self-regulation that not only prevents the system from taking advantage of the user, but also acts to promote the users interests and well-being.
Dash provides the option to send transactions both as a regular cryptocurrency transactions and as more private transactions through PrivateSend, while being used by people all around the world for commerce. Dash is continuously increasing partners and technology to grant users more earning and spending options. The options and large scale usage of Dash argues that Dash is being used less for speculative investments or for illegal activities and instead being used as a currency that prioritizes its users. Dash is structured to serve and protect users right now and is surpassing regulators at their own job because Dash has its own stronger incentives.