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CFTC Chair Says Regulator Is 'Behind' on Blockchain

The head of the U.S. Commodity Futures Trading Commission (CFTC) told Congress on Wednesday that the agency is “falling behind” on the subject of blockchain compared to other countries.

Chairman J. Christopher Giancarlo was speaking before the House Committee on Agriculture, addressing questions about the agency’s performance and future agenda. It was during that time that the chairman fielded a question about blockchain.

He noted that the regulator is hamstrung in certain ways – for example, Giancarlo said that the CFTC can’t operate a node on a blockchain operated by a banking consortium – despite being invited to by those institutions – because the sharing of information and data is considered a gift and therefore is something the CFTC can’t accept.

Similarly, the CFTC cannot purchase or rent the ability to run a node because it would require an appropriations bill through Congress. As a result, he said, “by the time we go through all that, this thing is already launched.”

Instead, he advocated for a bill introduced by Rep. Austin Scott which would grant the regulator the ability to accept shared data – something that would give the CFTC a leg-up on the topic.

“We’re falling behind. Just two days ago the Bank of England announced that they’re putting in a new bank-to-bank payment system in the UK and it’s going to be blockchain-complaint,” Giancarlo said during the hearing.

He went on to explain:

“[The Bank of England has] had the last four years … to participate in all these blockchain beta tests that we have not been able to participate in and they’ve been able to get comfortable with the technology and now they’re incorporating it. I feel we’re four years behind because we do need to test it, we do need to understand it so we can do a better job as regulator before I then come to Congress and say we need money to to build something.”

The ironic part, Rep. Michael Conaway quipped, is that the CFTC does have legal authority to demand information after the blockchain is launched, but current laws prevent the regulator from looking at the information prior to that point.

Giancarlo agreed, saying “we do have subpoena authority [but] that’s probably the wrong way to get involved.”

Eye on the market

Giancarlo also addressed the regulator’s ability to oversee cryptocurrencies specifically, noting that the regulator is limited to commodities and futures contracts, as well as fraud and manipulation.

That being said, he added, “the amount of ink that’s devoted to [cryptocurrency] far outweighs their real role in the economy.”

He explained that the total market capitalization of all cryptocurrencies “is probably less than one publicly traded company,” adding:

“The best model I like to point to in the 1990s when a Democrat White House and a Republican Congress worked together around this thing called the internet and took a ‘first-do-no-harm’ approach. Regulation came slowly and let the technology evolve.”

“I think we need to stay close to it, we need to be careful, but I think we can let it develop a little bit before we run in with regulation,” he concluded.

Christopher Giancarlo image via House Committee on Agriculture

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What to Expect When Congress Talks Crypto (Twice) Tomorrow

It’s a crypto doubleheader on Capitol Hill tomorrow.

Two U.S. House of Representatives Committees will be hosting hearings on Wednesday to look at the topic from two distinct angles.

The House Committee on Agriculture will focus on the emergence of “digital assets” while the Financial Policy Subcommittee hearing will examine “the extent to which the United States government should consider cryptocurrencies as money,” as previously reported.

According to new information published Tuesday, the Agriculture Committee hearing will notably see former JPMorgan blockchain lead and current CEO of Clovyr Amber Baldet, former Commodity Futures Trading Commission (CFTC) chairman Gary Gensler and Andreessen Horowitz managing partner Scott Kupor, among others, testify.

“This hearing will shed light on the promise of digital assets and the regulatory challenges facing this new asset class. Our committee has a deep interest in promoting strong markets for commodities of all types, including those emerging through new technology,” Rep. Michael Conaway, chairman of the committee, said in a statement.

By contrast, the Financial Services hearing seems to be tackling the broader question of what cryptocurrencies are exactly. According to a memo detailing the hearing’s goals, members “will evaluate the merits of any uses by central banks of cryptocurrencies, and discuss the future of both cryptocurrencies and physical cash.”

As of press time, none of the committee members contacted by CoinDesk responded to requests for comment, leaving the question of sentiment around the topics an open one ahead of the hearings.

Yet as for what those tuning in can expect, one might want to refer to the last few times Congress tackled the subject.

Back in March, for example, a hearing on initial coin offerings – likely to emerge during the testimonies tomorrow – saw lawmakers argue for greater protections while Representative Tom Emmer called for more regulatory restraint. A hearing in May saw lawmakers discuss the “almost limitless” applications of the tech, to borrow a phrase from one Department of Homeland Security official.

Luckily for those hoping to follow the action, the hearings – which will be live streamed – are spaced out throughout the day. The Agriculture Committee’s gathering is set for 10 a.m. EDT, with the Financial Services Committee’s hearing scheduled for 2 p.m. EDT. B

U.S. flag image via Shutterstock

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.