WASHINGTON D.C. – The United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will testify before of United States Senate on the “oversight role of government on virtual currencies” today, on February 6, and if the early release of the testimony of the CFTC and and SEC are any indication, they look to be positive.
In the public hearing, SEC chairman Jay Clayton will join CFTC chairman J. Christopher Giancarlo as chief witnesses. This hearing comes after Bitcoin and other cryptocurrencies entered the public spotlight anew during last week’s World Economic Forum (WEF) 2018, with senior politicians from various major economies stating their intention to heighten legislative interaction.
The testimony posted on the US Senate website has Clayton talking about (1) preserving innovation, (2) continued efficacy of Howey Test (from the landmark case of SEC v. W.J. Howey Co.) of for judging whether crypto/token is a security ,(3) SEC & CFTC together have situation under control and (4) states may not be the best choice for preeminent regulator of exchanges.
Indeed, Clayton stresses that the innovation cryptocurrencies bring to the table should not be squandered and constricted, to quote: “These warnings are not an effort to undermine the fostering of innovation through our capital markets – America was built on the ingenuity, vision and spirit of entrepreneurs who tackled old and new problems in new, innovative ways.”
He also stresses that in determining if a coin is classified as a “security” or not is on a case by case basis, to quote: “there are cryptocurrencies that, at least as currently designed, promoted and used, do not appear to be securities” Also, “determining what falls within the ambit of a securities offer and sale is a facts-and-circumstances analysis, utilizing a principles-based framework that has served American companies and American investors well through periods of innovation and change for over 80 years.” Basically, the old methods of determining security are the best methods, the SEC notes.
In fact, he says “It is possible to conduct an offer and sales of securities, including an ICO, without triggering the SEC’s registration requirements. just as with a Regulation D exempt offering [for products], an ICO that is a security can be structured so that it qualifies.”
On regulating exchanges, Clayton says that “they are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate.”
For the CFTC, J. Christopher Giancarlo stresses that “any regulatory power the CFTC has over virtual currency spot markets would require statutory amendment of the CEA law.” As such, they believe currently have no regulatory power over cryptocurrency spot markets.
The “positive news” comes after a prices plummet due to news of countries like India, China and Japan flexing their regulatory muscle on cryptocurrency. Hopefully, this would help the markets rally out of the current bear market.