P Xenos and M Bacina
2019: the year of a crypto crackdown?
Former Commodity Futures Trading Commission (CFTC) chairman Christopher Giancarlo, has recently said that he expects 2019 to be the year when regulators begin to clampdown on cryptocurrencies.
Giancarlo made his opinion known during an interview with industry news outlet, The Block, stating:
I would say 2019 is the year in which there's a growing recognition that regulators and policy makers need to do more than just be aware of these, but may actually need to look at some policy responses.
Giancarlo also believes that “a combination of Libra and the prospects for central bank digital currencies” will spur regulators to increase their involvement in the crypto space this year, suggesting that “the time has come for thoughtful consideration of a digital dollar.” According to him, the dollar’s hegemony would be further cemented by such a development, suggesting that:
I think that the dollar's status as the world's primary reserve currency should be enhanced with a digital component and done in a way that doesn't have to disintermediate the traditional banking system but can be done so traditional finance financial intermediaries can play a role in a digital component to the dollar.
It was only very recently, that a letter was sent to Federal Reserve Chairman Jerome Powell, by Rep. French Hill (R-Ark.) and Rep. Bill Foster (D-Ill.), both members of the House Financial Services Committee, outlining why they thought the Fed should be developing a national digital currency for the US. The recent action against Kik and Telegram are signals of the SEC becoming more robust in trying to block token offerings. None of these prosecutions have gone to trial as yet, but Telegram may well be the candidate for this.
The US House Financial Services Committee's recent hearings on Libra displayed an expressed concern that the primacy of the U.S. Dollar could be in long-term jeopardy from wide adoption of digital fiat currencies.
Giancarlo admitted that he does not “see the Federal Reserve becoming a deposit-taking institution, but would use a uniform set of technology protocols in order to provide access to a digital dollar format.”
Internationally, the Bank for International Settlements conducted a study that found that over 40 countries around the world have currently developed or are looking into developing a digital currency. China is leading the way with their CBCC (Central Bank Issued CryptoCurrency) recently hosing down rumours of an upcoming launch.
The real question will be whether the home of Silicon Valley will be able to catch up with China or the Crypto Valley of Switzerland in embracing this new technology and opportunity.