Gavin Smith,CEO at Panxora discusses the largely unacknowledged monopoly that the US authorities have over cryptocurrency development globally.
This week the CFTC announced that it is seeking public comment and feed back in order to better inform the its understanding of the technology, mechanics,and markets for virtual currencies beyond Bitcoin, namely Ether and its use on the Ethereum Network.
Amove towards better understanding cryptocurrency from a regulator is always apositive step. If crypto is ever going to be accepted into the mainstream,regulation is essential.
However, the moves that US regulators have already made leave something to be desired. In the US, regulators now classify all tokens as securities -regardless of purpose. And for Bitcoin, the requirements are so heavy-handed that it is practically impossible to use crypto for what it was intended as: a viable alternative to traditional currency. It’s highly unlikely that anyone would buy a coffee or a T-shirt with crypto if they had to verify their identity and be treated like a criminal every time they wanted to make a purchase.
The effects of this are being felt worldwide. US authorities are controlling the development of cryptocurrency globally by imposing draconian fines and sometimes criminal proceedings on companies. This can apply regardless of whether businesses are legally operating their own jurisdictions or operating with US customers.
For companies operating outside of the US, this is highly concerning. It is difficult to create a business that may be perfectly legal in the jurisdiction where you operate, but still risks prosecution by the US Federal Government. This creates an uneven playing field where US companies are free to operate globally while non US companies do not have the same privelages.
Until sovereign governments introduce more measures to protect the businesses operating within their borders, the US is being handed unchecked power in controlling the development of the crypto-economy.
This also creates an uneven playing field where companies in the US that are correctly regulated are free to operate globally, but correctly regulated overseas companies do not gain reciprocal access to US markets. While it’s a welcome move forward for the US to provide clarity, overseas regulators need to be more proactive or risk ceding control of this exciting new asset entirely to the United States. Hopefully, as US regulators start to have more insight available to them, US regulators will reassess their approach, before they eradicate crypto completely.