Regulators are here to stay.
That was a common thread in the conversations Wednesday at Yahoo Finance’s cryptocurrency event in New York.
Whether that’s a good or bad thing is a matter of opinion. But even for those wary of government oversight, it’s perhaps a less unpleasant thought in light of the previous day’s hearing before the U.S. Senate Banking Committee, where the chairmen of the SEC and the CFTC expressed a generally open attitude toward crypto.
Against that backdrop, Brian Quintenz, a member of the Commodity Futures Trading Commission, pointed out that the Tuesday hearing was free of the scaremongering pronunciations that some in the ecosystem perhaps expected.
“One of the other takeaways from yesterday was you didn’t hear either chairman say ‘no, absolutely not, this is not safe, we must stop this at all costs.’ No one said that,” Quintenz said at the Yahoo event during an onstage interview with CoinDesk managing editor Marc Hochstein.
Noting that any congressional action to fill in jurisdictional gaps identified by the SEC and CFTC will likely take a long time, the commissioner called on the industry to consider forming a self-regulatory organization.
Successful examples of this model include the Financial Regulatory Industry Authority and the National Futures Association, he said. Such an organization would provide necessary oversight of the spot market and exchanges “between now and however long Congress chooses to act,” he said.
Quintenz went on to add:
“We don’t want to be saying no to innovators, or to advancing technology.”
Speakers drawn from the startup ecosystem likewise struck diplomatic notes toward regulation.
Adam White, general manager of the Coinbase-operated digital asset exchange GDAX, said that government oversight was something the company welcomed.
“I think we embrace regulation at Coinbase,” he said. “We recognize that regulations are a complementary part of the financial system in many ways.”
Similarly, Brad Garlinghouse, the CEO of Ripple, stressed his company’s longtime friendly posture toward regulators (which made it stand out from the libertarian early adopters of bitcoin), saying:
“I don’t think the US dollar’s going away in my lifetime. I don’t think the US government’s going away in my lifetime. The revolution isn’t happening outside the system. The revolution’s going to happen inside the system.”
For others, including BitPesa CEO Elizabeth Rossiello, regulation is an everyday reality, especially for businesses that serve as bridges between cryptocurrencies and government-issued money.
“In an ideal world, we wouldn’t have regulation. But in the real world, my customers ask me: ‘Do we work with companies which [comply with investor rules]?” she said.
On the investor side, speaker Alex Sunnarborg, founding partner of hedge fund Tetras Capital, described how lack of regulatory oversight could have a significant impact, for example in Simple Agreements for Future Tokens. What if those future tokens are never delivered?
“The big fear there is you enter into a SAFT which gives you a discount or allocation into a sale in the future … but the sale [doesn’t happen],” he said.
Image of Brian Quintenz (right) by Nikhilesh De for CoinDesk
Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has ownership stakes in BitPesa, Coinbase and Ripple.