Bitcoin News

CFTC Commissioner Urges Cryptocurrency Self-Regulation

japanese cryptocurrency

Speaking at the DC Blockchain Summit last week, Commodity Futures Trading Commission (CFTC) Commissioner Brian Quintenz urged the cryptocurrency community to self-regulate. That’s an encouraging sign coming from a federal regulator, and an indication that US regulators aren’t about to crack down on Bitcoin and other cryptocurrencies anytime soon.

Self-regulation is a well-established concept in financial services, with the Financial Industry Regulatory Authority (FINRA) in the United States having set the benchmark for the concept. FINRA was founded in 1939 as the National Association of Securities Dealers, and acts as a self-regulatory agency overseeing securities dealers, subject to the oversight of the Securities Exchange Commission (SEC). FINRA regulates trading in securities, examines securities dealers for compliance, and disciplines dealers who fall afoul of regulations.

Japanese cryptocurrency exchanges have already followed the self-regulatory model and formed their own self-regulatory organization (SRO). That move came in response to a hack of a Japanese cryptocurrency exchange that resulted in the loss of hundreds of millions of dollars worth of customer funds. Now we’ll have to see if US cryptocurrency exchanges follow suit and found their own SRO.

Creating an SRO would be beneficial to the cryptocurrency community and cryptocurrency investors by providing some much-needed stability to the market. In a market as innovative as cryptocurrencies, there are still a large number of fly by night operators looking to make a quick buck off of investors. An SRO would help keep those types of companies from gaining any traction within the cryptocurrency community.

But a cryptocurrency SRO would also lessen the impact of any potential government regulation. If the SEC and CFTC were the sole organizations issuing cryptocurrency regulations, that regulation would take a long time to develop, would risk being too heavy-handed and stifling of cryptocurrency innovation, and any mistakes made during the drafting of regulations, or any unexpectedly negative effects of regulation, could take months or years to be resolved.

By creating an SRO, existing cryptocurrency businesses can nip any move towards harmful government regulation in the bud while simultaneously creating a set of standards to which cryptocurrency businesses should adhere. That should be good news for Bitcoin IRA investors, who would benefit from the stability and standards that an SRO would implement.