U.S. regulators are still looking into cryptocurrencies and initial coin offerings, but don't aim to suppress the industry, according to comments made during a panel at CoinDesk's Consensus 2018 conference in New York.
Commodity Futures Trading Commission (CFTC) enforcement director James McDonald, Securities and Exchange Commission (SEC) Enforcement Division Cyber Unit chief Robert Cohen and associate deputy attorney general Sujit Raman participated in a panel discussion on enforcement activities in the space Tuesday. They were joined by Kiran Raj, chief strategy officer at crypto exchange Bittrex, with the panel moderated by attorney Steve Bunnell.
The government representatives, who disclaimed that they only spoke for themselves and not their respective agencies, notably all agreed that they did not want to hinder innovation or interfere unduly with blockchain or the tokens built on the nascent technology.
That said, they all also stated that they had to act against those seeking to defraud or outright steal from participants in the space.
Cohen and McDonald both said their agencies had "open-door policies" for those trying to launch token sales, with Cohen explaining:
"The SEC has been open about meeting with people from the industry, to come in and meet with the staff, to talk about the ideas you have, the new developments, and have a dialogue about the new technology. The commission encourages ways to raise capital, we don't regulate the technology - we regulate the financial industry and the markets."
On actually regulating the space, McDonald noted:
"Our mission is to foster financially sound markets, and we understand as a regulator that requires a certain amount of [flexibility] in our approach. We're doing it in a way that doesn't hinder innovation and doesn't interfere with other regulatory priorities."
Raman similarly cited a need to protect Americans as the focus for any actions taken by the Department of Justice, saying:
"The number one priority for the Department of Justice is to keep people safe. One concern we have for the larger virtual currency space is large sums of money are flowing through the market without touching financial institutions ... From a national security perspective or an anti-money laundering perspective, that's something ... we have to investigate. As with anything else, it's a balance but it's certainly one of our priorities, to know what's going on."
When asked about his concerns, Bittrex's Raj pointed to a lack of regulatory clarity surrounding token sales:
"One of the big pieces of feedback I get ... is we need more certainty. One of the main things we get is we hear about fraud ... we agree, we don't want them in the industry. The problem is how do we take guidance and apply it to what you're doing when it's so far away from what the fraud people are doing?"
McDonald agreed, saying:
"LabCFTC is providing their expertise to make sure we end up in the best place possible. We're careful not to be putting ourselves out there in the same way that the policy divisions would be but the policy divisions are having conversations with market participants."
However, Cohen said the SEC has released guidance on tokens, saying:
"The main issue is whether the token or whatever asset you have is a security, and the commission has put out guidance on that. If a firm or person is making a good-faith effort to comply with the law, and one step to that is if they're talking to regulators, [we'll work with them]."
For those who do seek to defraud others, Cohen said:
"It's clear when people are not making good-faith efforts to comply, and that's when we step in."
Read the full rundown on Twitter.
Panel image by Nikhilesh De for CoinDesk (Kiran Raj, @CFTC's James McDonald, @SEC_News' Robert Cohen, @TheJusticeDept's Sujit Raman and Steve Bunnell)
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
Richemont Director Jin Keyu Joins Blockchain Startup as Adviser
Richemont, the Swiss luxury goods giant that owns Cartier, will potentially utilize blockchain in a move aimed to bring transparency to its supply chain.
Jin Keyu, a renowned economist and an assoc
Thailand Is Planning a 'Bond Coin' for Faster Securities Settlement
A self-regulatory organization in Thailand is planning to create a custom token aimed to speed up corporate bond settlement in the country.
The Thailand Bond Market Association (TBMA) said it has r
G20 Watchdog Releases Framework for 'Vigilant' Crypto Monitoring
The Financial Stability Board (FSB), an organization focused on analyzing and making recommendations to the G20 on global financial systems, has presented a framework for monitoring cryptocurrency ass
Report: World's Biggest Asset Manager BlackRock Exploring Bitcoin
Global investment management company BlackRock is reportedly mulling a move into bitcoin.
According to a Financial News London report on Monday, the New York-based asset manager has now set up a wo
A Crypto Exchange Is Buying Back $24 Million-Worth of Its Own Tokens
FCoin, a new cryptocurrency exchange that saw spiking trading volume recently due to its controversial revenue model, has revealed a plan to buy back millions of its own tokens to provide capital for
Hong Kong's Blockchain Trade Finance Platform to Go Live By September
The Hong Kong Monetary Authority (HKMA), the autonomous Chinese territory's de facto central bank, is poised to launch a live blockchain trade finance platform within two months.
"The Trade Finance
Peter Thiel, Bitmain Co-Founder Invest in EOS Developer Block.one
EOS protocol maker Block.one has received new backing from a number of big-name investors, including PayPal co-founder Peter Thiel.
In a fresh round of funding – the amount of which was not disclos
Court Approves Alleged Bitcoin Money Launder's Extradition to France
A Russian national accused of laundering billions of dollars on the now-defunct crypto exchange BTC-e could soon be extradited to France following a court decision.
Since his arrest last summer, Al