Just days after China intensified their crypto crackdown, Federal Reserve Chair Jerome Powell said that he has no intentions of banning cryptocurrency. This was said during a Congress testimony and left many in the digital asset space pleased but not surprised.
Bobby Zagotta, US CEO of crypto exchange Bitstamp, said “It’s hard for me to believe that US regulators would decide that was the best course of action given the role that cryptocurrencies are playing in so many citizens’ lives.” He then added, “I think doing that would be incredibly disruptive and it would really put the US and the economy in a compromised situation.”
A ban on cryptocurrencies would also drive technological and financial innovation out of the US and into other countries. Instead, crypto players say they want to see stakeholder engagement and regulatory clarity.
Charlie Silver, CEO of crypto-focusses advertising firm Permission.io, said, “The US is the financial center of the world – the capital flow is here. I’ve always been of the mindset that the US is going to regulate crypto, but with a light touch.”
US regulators, including the SEC, have been debating over how to oversee the crypto space. SEC Chief, Gary Gensler has criticised digital assets in the past saying this month that platforms have become too large, stable coins are “equivalent to poker chips” and that crypto is not a viable, long-term form of private money.
The comments from Gensler only give hints at the direction that SEC could take in regulating crypto. This has left the market guessing as to what they might have to do to comply with future rules.
Zagotta has said that he hopes the US regulators will have a “constructive partnership-orientated approach.” In this approach, stakeholders come in and discuss with regulators what policies should be set in place rather than regulation by enforcement. Regulation by enforcement would mean that regulations from years ago would be brought in to tackle current trends.
Zagotta said, “We believe for true widespread adoption to happen, there have to be some rules. There’s kind of an anarchist bent to some of the crypto players where they don’t think any rules are applicable in any jurisdiction. That posture is going to slow down adoption.”
Earlier this week, Gensler said that crypto investors are likely to get hurt if the digital asset space does not have a high level of security and protection. He suggested that the level of protection in the cryptocurrency space should be similar to what can be found for bank deposits and insurance.
The question around what regulators will eventually come up with remains.
