In a recent appearance at the MIT Bitcoin Expo, SEC commissioner Hester Peirce said a self-regulatory system could be a viable option for the cryptocurrency market. In the discussion, Peirce was joined by Gary Gensler, former chairman of the CFTC. Gensler stated that he would like to see either the SEC or the CFTC to have “broad authority” over cryptocurrency exchanges to prevent market manipulation.
“I think that the exchanges are the gateways to get good public policy, particularly around any money laundering laws and tax compliance, but also for investor protection. Whether it’s the SEC or the agency I was once at, the CFTC, I think if Congress were to get involved, there should be some authority to ensure for investor protection.”
The two then discussed whether the U.S. should adopt federal rules for registering cryptocurrency exchanges, or whether they should keep the current system where there are different rules on a state-by-state basis. Peirce said she could see a self-regulatory approach being effective:
“That’s the regulatory model we’ve chosen. I think these markets could regulate themselves if we lived in a world where we allowed that.”
You can view the video from the MIT Bitcoin Expo here. The discussion between Gensler and Peirce starts at around the 2:30 mark. The two also discussed ICOs and how to deal with crypto assets that seem to meet the definition of a security.
Peirce emerged as a favorable figure in the cryptocurrency community when she argued against the SEC’s rejection of a Bitcoin ETF proposed by the Winklevoss Bitcoin Trust. Her stance earned her the affectionate nickname “crypto mom”, and Peirce now often comments on cryptocurrencies, particularly from the viewpoint of regulations.
Self-regulation efforts are already underway
There have already been efforts towards self-regulation in the cryptocurrency industry. Unsurprisingly, crypto-friendly Japan is spearheading these efforts, as the country’s licensed cryptocurrency exchanges have joined to form JVCEA, an industry body that has received approval from Japanese regulator FSA to sanction its members if they are found to be violating rules put in place by the organization.
In the U.S., there has been some progress on the self-regulatory front as well. In August last year, four cryptocurrency exchanges (Gemini, Bitstamp, BitFlyer and Bittrex) established the Virtual Currency Association (VCA), a group that’s working towards establishing a self-regulatory organization for cryptocurrency exchanges.