Hoskinson opines that the crypto industry should have clearer rules, but that compliance should come from the industry itself, not from the government.
Cardano co-founder Charles Hoskinson has told Congress that crypto rules should be created but compliance should be left to software developers.
During a congressional hearing on June 23, Hoskinson compared the ideal setup for crypto regulation to the way financial self-regulation works, telling lawmakers that “it’s not the SEC or the CFTC going out there performing KYC-AML, it’s banks.”
“It’s a public-private partnership. What needs to be done is to establish those boundaries, then what we can do as innovators is written software to help make that happen.”
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are two financial regulators vying for control over the cryptocurrency business.
Republican Representative Austin Scott of Georgia asserted that neither the SEC nor the CFTC has the resources to oversee the thousands of cryptocurrencies on the market, claiming that “it is not practical to regulate all of these currencies.”
Hoskinson responded that because cryptocurrencies can store and transfer data, they can automate much of the regulatory work. He also used it to justify allowing the crypto business to form self-regulating organizations (SRO) to advise regulatory compliance, similar to how the private banking industry does.
Hoskinson proposed that the industry develop a “self-certification system” that would automatically monitor compliance until an abnormality was discovered, at which point it would be reviewed by a financial authority.
Hoskinson theorized that even quadrupling the capacity of the Internal Revenue Service (IRS) would not be enough to audit every American, demonstrating why manpower should not be an issue for crypto regulation.
Hoskinson, on the other hand, informed Representative Scott that cryptocurrencies can be programmed to prohibit transaction settlements until legally mandated checks are conducted.
Hoskinson’s June 23 testimony, posted on the IOHK website, highlighted his eagerness to collaborate with federal regulators on drafting new rules, adding that compliance with US regulations and legislation “must be a guiding value for the blockchain business.”
“However, this is a new technology and a radically new asset class that can not readily fit within the confines of the laws and tests created almost a century ago.”
Hoskinson’s calls for clearer boundaries in the crypto regulatory landscape echo those expressed by other industry insiders last December in the United States. SEC Commissioner Hester Peirce recently attributed the SEC’s refusal to launch spot Bitcoin exchange-traded funds (ETFs) in the US to a lack of regulatory clarity.
