The Commision Commodity Futures Commission (CFTC) and the Securities and Exchange Commission (SEC) on the morning of February 6, 2018 to discuss their roles in the Blockchain, virtual currencies and ICOs. Housed in Washington D.C. at the Dirksen Senate Building, the Banking, Housing and Urban Affairs Committee met in open session for approximately two hours. Before the beginning of the hearing, testimonies were given on behalf of the two witnesses

The Pre-Testimonies

(these testimonies were made public on February 5, 2018

J. Christopher Giancarlo, President and TCTC witness, expressed his optimism in his testimony on Blockchain / DLT, devoting one and a half pages (VI.Possible Benefits) to the many ways whose financial institutions, charities, social services, agriculture and logistics can all benefit. Giancarlo seemed very optimistic in allowing more freedom for DLT, even comparing it to the Internet:

"This simple approach is well recognized as the enlightened regulatory foundation of the Internet that has brought Such profound changes to human society.In the course of almost 20 years of "do no harm" regulation, a huge investment has been made in the Internet infrastructure, allowing for a rapid expansion of the Internet. access that has supported the rapid deployment and widespread adoption of Internet-based technologies Internet-based innovations have revolutionized almost every aspect of American life, from telecommunications to commerce, transportation, and research and development. [“Do] no harm "was undoubtedly the right approach to the development of the Internet. Likewise, I believe that "do no harm" is the right global approach to distributed register technology.

Despite his optimism, the President again stated that digital currencies "will probably require more careful regulatory oversight" with respect to "fraud and manipulation." But in his conclusion he indicated that the SEC and CFTC should do its best to leave room for growth:

"As we have seen with the development of the Internet, we do not can not put the genius of technology back into the bottle. Virtual currencies mark a paradigm shift in the way we think about payments, traditional financial processes, and economic activity. Ignoring these developments will not make them disappear, nor is it a responsible regulatory response.

Jay Clayton, the president of the SEC, was a little less excited about virtual currencies – but he was not either "not to deny their role in a financial ecosystem

"To be clear, I am very optimistic that financial technology developments will facilitate capital formation, providing promising investment opportunities for institutional and Main Street investors alike. From the point of view of financial regulation, these developments could enable us to better monitor transactions, positions and obligations (including credit risks) and other activities and characteristics of our markets, thus facilitating our regulatory role. , especially the protection of savers. "

But he also admits that there are still many traps:

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"At the same time, regardless of the promise of this technology, those who invest their hard-earned money into opportunities this fall under federal securities laws deserve all the protections afforded under these laws . This ubiquitous need manifests itself when the enthusiasm to get a profitable coin of a new technology "before it's too late" is loud and wide. Fraudsters and other bad actors take this enthusiasm. "

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The President of the SEC Clayton and CFTC President Giancarlo, source of the image: c-span

Although Giancarlo mentions the word "ICO" once in his testimony, Clayton mentions 132 times

A recent study found that 10% of all ICO recipes were lost due to hackers and frauds, and Clayton's fear is that many non-investors educated lose a lot of money. ban on advertising:

"I want to acknowledge that recently social media platforms have restricted the ability of users to promote ICOs and crypto-currencies on their platforms, I'd say: appreciate the responsible step. "

Clayton continues to praise DLT's innovations (Distributed Le dger Technology), better known as "Blockchain", but hoping to create limits for ICO

"Simply put, we should embrace the pursuit of technological progress, as well as innovative new techniques for raising capital, but not at the expense of principles that undermine our well-founded and proven approach to protecting investors and markets."

The General Stance

Clayton mentioned that he and Giancarlo "established a solid relationship". They are ready to work together to put in place a sound regulatory framework. In the simplest terms, there seems to be a gradient that begins at ICOs, virtual currencies, then DLT. DLT needs a little regulation, and in fact the SEC and CTFC seem to encourage anyone who wants to develop this approach. ICOs are on the other side, demanding the most regulation, and virtual currencies are in the middle, requiring protection against fraud and market manipulation.

Testimony of today

The audience of today was refreshing. President Giancarlo and President Clayton remained enthusiastic about the potential of decentralized technology and cryptocurrence throughout the hearing.

Clayton divided it into three categories: DLT (Distributed Ledger Technology), Cryptocurrencies and ICO. As indicated in the pre-testimony, the CTFC wanted to allow the growth of DLT and cryptocurrencies, while keeping a watchful eye on fraudsters in the ICOs.

Giancarlo was very optimistic about cryptocurrency. In his statement, he said, "We owe it to this generation to respect this generation's interest in cryptocurrence and to punish those who persecute." He spoke of the interest his children bore to the world. Bitcoin and it was exciting to see them if interested.

CFTC President Giancarlo begins by telling the story of his three children of school age who are excited about #Crypto, as are most #millenials . He advocated that we embrace #CryptoCurrency. Great stuff! We can thank his children for that one. #PayWithLitecoin – Łitecoin Dad ™ (@litecoindad) February 6, 2018

He also mentioned CFC Lab: The organization of the CFTC to educate Main Street about cryptocurrencies. Giancarlo emphasized that education was the most important route to take in monitoring cryptocurrencies; the CFTC has never conducted as much outreach as in this area

Senator Crapo mentioned that neither of the two agencies had full jurisdiction over them. cryptocurrencies and ICOs. Giancarlo and Clayton both agreed that they "might need additional authorities to regulate," but before they can accept that, they need to learn more about the crypto space . Clayton also briefly touched on the issue that the SEC does not have enough money to hire more people.

When Senator Cotton asked Giancarlo about the value of Bitcoin, Giancarlo replied " where there was no Bitcoin, there would not be DLT . "Clayton and Giancarlo both know that cryptocurrencies are important for DLT's development and want to see technology grow without anyone being hurt in the process, and Giancarlo said the Bitcoin floor is not could not be zero.This is because the value of Bitcoin is "linked to mining."

There was no talk of tax regulations at all, Clayton and Giancarlo also admitted that they had no jurisdiction over nation-states, like Venezuela, using cryptocurrencies to avoid sanctions.

Clayton mentioned that Bitcoin ETFs are not ready but that "there will be room in the future.

Finally, Senator Warren asked Clayton how they can make the IFAs safer. Clayton replied that many ACIs actually violate existing laws and that IFAs "should pay more attention" because the SEC will investigate these violations further.

The best solution, according to Giancarlo and Clayton, would be:

Educating the masses on Bitcoin and cryptocurrencies

Use Jurisdiction they have on the Bitcoin Futures Markets to Collect Use data from the task force to attack the "scammers" who swindle Main Street investors into ICO pyramid schemes and cryptocurrency without value.

In summary, cryptocurrencies will allow growth in the United States in the same way as the Internet. The United States should be a leader in this area and ensure that no one is hurt in the process. Crypto HODL's all agreed that the news was very optimistic.

On a side note, Giancarlo thinks that "HODL" is an acronym for "Hold On for Dear Life."