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Ex-FDIC Chair Bair: 'I Welcome' New Rules for Crypto

Sheila Bair, a former chairperson of the Federal Deposit Insurance Corporation (FDIC), believes the U.S. should create a wholly new regulatory framework for cryptocurrencies.

Speaking at CB Insights’ Future of Fintech conference on Thursday, the noted Fedcoin supporter – that is, a cryptocurrency operated by the U.S. central bank – addressed the challenges that regulators face when applying existing financial regulations to the nascent crypto space.

Bair adding that “regulators get a bad rep on this … [but] money transfer law is weird.”

She went on to explain:

“We are trying to jam [cryptocurrencies] into [a] state of money transaction laws, it just doesn’t work. I think at some point, we will need a federal framework to have some type of regulatory oversight of exchanges established to trade crypto assets. They may also be securities, if there is an [initial coin offering] being used to raise equity, they need to regulate it.”

Bair declared that she “welcome[s] regulation” of the cryptocurrency space, advocating for action that takes place sooner than later.

Indeed, the former head of the U.S. government corporation that backs up bank deposits said that the private sector may force financial institutions to adopt private currencies – including cryptocurrencies – because “everybody hates bank account fees, the retailers hate interchange fees.”

“If there is a way to get around that, I think you can see a shift [fairly] quickly,” she said, adding:

“I do think the Fed needs to get ahead of this.”

Bair reiterated her support for the “FedCoin,” noting that a central bank-issued cryptocurrency would solve transitional issues existing in current monetary policies issues while allowing the Federal Reserve maintain its ability to control the U.S.’ money supply.

As an example, she pointed out that a bank which receives a 1.95 percent interest rate with the Fed tried to offer a 0.01 percent rate to individuals opening a savings account.

Sheila Bair image via CB Insights

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Ripple CEO Defends XRP's Utility at Fintech Conference

“Let’s be clear: Ripple is different than XRP,” Brad Garlinghouse, CEO of distributed ledger startup Ripple, argued during CB Insights’ Future of Fintech conference on Thursday.

Garlinghouse opened his talk by pushing back against arguments that the XRP token may be considered a security, given its close link to the San Francisco-based company. He also spoke about the work the company has done to date in partnership with a range of banks and financial firms.

Perhaps his strongest comments came in response to a question about whether XRP is a security for Ripple, a claim he – and other Ripple employees – have strongly rejected. A senior official for the Securities and Exchange Commission recently stated that bitcoin and ether aren’t securities and the lack of any similar comment about XRP renewed that critique.

As he explained during the CB Insights event:

“XRP is not a security for three reasons: if Ripple, the company, shuts down tomorrow,  the XRP ledger will continue to operate; it’s an open-source, decentralized technology; …. if you buy XRP, [you are] not buying shares of Ripple – buying XRP doesn’t give you ownership of Ripple.”

Garlinghouse also repeated concerns he has about bitcoin, saying “I own … [and] am bullish on bitcoin but we need to acknowledge … when we talked about something being centralized and decentralized, control is the key element.”

He even went so far as to cast doubt on the SEC’s classification that bitcoin is not a security, asking “how decentralized is it?”

“Three miners in China control more than 50 percent of the hash rate of bitcoin,” he asserted, contending that the Chinese government may interfere with these miners and, as a result, have the ability to exert some form of control.

Brad Garlinghouse image via CB Insights

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Trump Official Argues for 'Sweet Spot' in Crypto Regulation

The U.S. government needs to find the “sweet spot” in its oversight of the cryptocurrency ecosystem, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, said on Wednesday.

Speaking at the Future of Fintech conference hosted by research and analysis firm CB Insights, Mulvaney, who also heads the Office of Management and Budget, touted his pro-bitcoin credentials, noting that he is fiscally conservative and “was one of the founding members of the bitcoin caucus and blockchain caucus.”

Sympathies aside, he argued that regulation is important to protect investors – but the government should not discourage potential investors or developers from entering the market through burdensome laws or regulations.

Mulvaney explained:

“We knew at an early point in bitcoin that as with any developing financial technology we needed to find that sweet spot … if Mt. Gox became a regular occurrence it dramatically undermines confidence in the markets and prevents innovation. And if we over-regulate and discourage people from entering the marketplace, that has bad consequences too.”

In other words, Mulvaney said, “we’re looking for that Goldilocks [path] in the middle.”

He explained the concerns that might arise with a lack of investor protection, saying: “It’s a new and innovative technology, it’s a nonbanking system, it’s whatever. If people still can’t get access to their own money, that’s a problem. So the law’s functioning correctly there.”

What Mulvaney is trying to accomplish now, he argued, is ensuring that the application of an existing law doesn’t lead to unintended consequences.

“If for some reason we’re looking at you and the only way we can look at you is through the lens of the bricks and mortar financial institution, and because we do that it has this perverse or absurd result, that’s what we’re trying to identify and to prevent,” he said.

Mick Mulvaney image via CB Insights

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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Robinhood CEO: It's 'Very Foolish' to Rule Out Bitcoin

More than a million people signed up to trade cryptocurrencies in the days after mobile trading app Robinhood first announced the feature, co-CEO Vlad Tenev at the Future of Fintech conference on Wednesday.

The co-founder of the investing app and web platform was bullish on bitcoin despite the price declines seen over the last few months, saying “this asset has staying power, significant staying power.”

Tenev noted that bitcoin’s price, in particular, has fluctuated in similar patterns before, adding:

“It’s very foolish to say bitcoin is done.” 

Robinhood, a micro finance investing app which sought to open access to stock trading to the general public, jumped on the cryptocurrency wagon earlier this year, as previously reported by CoinDesk.

Tenev said Wednesday that “around that time a lot of the biggest crypto exchanges and brokerages a lot of the exchanges … were just not staying up. [They were] down for days at a time. [We’re] focused on stability and reliability. We were able to sustain the customer orders … hundreds of thousands of accounts [added in a single day].”

At present, according to Tenev, the company is trying “to get people into the overall ecosystem.”

“What we’ve seen a lot is people hearing about us because of crypto, opening accounts … and become sort of customers of the entire Robinhood ecosystem,” he said.

That being said, “blockchain as a concept has become a little bit over-rated,” he noted, explaining that startups are trying to jump on the bandwagon by using decentralized ledgers where a normal database would suffice.

Still, Tenev admitted that “we want to be there as a market leader over the span of decades.”

Vlad Tenev image via CB Insights

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.