US Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo testified before the House Agriculture Committee last week. During the hearing he admitted that the agency has fallen behind on the issue of cryptocurrency regulation. In a field that develops as quickly as cryptocurrencies, by the time regulators are able to make a decision on something, developments on the ground have made that decision obsolete.
One problem that Giancarlo pointed to is that the agency is hampered by government regulations that were intended to put a wall between regulators and the companies they regulate, ensuring that no favoritism or regulatory capture takes place. But because of that, the agency is unable to effectively engage in regulation in the same manner in which its counterparts in other countries are able to. Some things it wants to do even would require legislation by Congress, which of course takes so long to come about that it essentially prevents CFTC from doing anything.
Given all of this it’s perhaps a miracle that cryptocurrencies are even able to operate in the US. Some regulators might have tried to impose a blanket ban, reasoning that no potentially regulated activity should proceed until a regulatory framework has been put into place. CFTC, thankfully, has not decided to do that. And while it has only formally approved the trading of Bitcoin futures, one has to wonder whether not having a formal framework in place has actually benefited the cryptocurrency industry in the United States.
Without a framework that could potentially have hampered the development of cryptocurrency products, companies have been free to innovate and meet consumer demands. From cryptocurrency exchanges to Bitcoin IRAs to hardware wallets, consumers who wish to purchase and invest in cryptocurrencies have a multitude of options at their fingertips. So there’s nothing to fear about regulators being behind the curve. They’ll catch up eventually, and by the time they do the marketplace will have provided even more useful products and services that won’t be able to be rolled back.