There are some good points here. I believe our industry should be promoting fair and reasonable regulation that does not inhibit the technology. It's easy to get confused when people talk about "regulating digital currency", I don't believe there is such a thing as regulating a decentralized digital currency itself, but the services provided that allow you to use them is where you need to focus.
In an opinion piece published by CNBC today, former CFTC commissioner Bart Chilton suggests that
digital currency enthusiasts need to be more active in seeking regulation for their industry if they want Bitcoin to have the bright future that many of them envision. In the op-ed, Chilton says that there are two main reasons for the currencys recurring problems in recent years.
His first observation is that digital currencies like Bitcoin arent like stocks.
As Chilton notes, most of these cryptocurrencies have no company assets that give them intrinsic value. As a result, their value is determined solely by what buyers are willing to pay to take ownership of them.
The second reason is that they are largely unregulated by governments. They lack the type of AML and KYC protections that banks are required to provide, and
offer few customer safeguards to protect against exchange failure. On the regulatory front, there is no effective surveillance of trading, no authorized investigators, and no punitive legislation to ensure that bad actors are deterred from criminal activities. According to Chilton, This all makes digital currencies exceedingly susceptible to fraud and manipulation. It's an open range for abuse.
To remedy those apparent weaknesses, he suggests that
digital currency enthusiasts shouldnt wait for regulations to be imposed upon the industry. Instead, they should invite appropriate regulatory oversight and take the lead on its development.
That is likely sound advice, and it comes from a man who has spoken highly of digital currency and the blockchain in the recent past. In 2016, Chilton called for then-President Barack Obama to embrace Bitcoin and its technology to ensure that the US shared in its potential economic benefits. Moreover, Chilton seems to recognize that digitization of money is inevitable. The question is how quickly it occurs, and what form it ultimately takes.
This is a really important statement, and should be the
catalyst for the cryptocurrency community to establish its own self-regulating body. There are many benefits for industries that self-regulate. And
there are plenty of examples and models to base development on. In the USA, the National Association of Realtors, the American Medical Association, in Australia and many other countries the organisation the rates movies and other media is self-regulated. And I think the best example online of successful self regulation is the W3C.
Because cryptocurrency is traded internationally, and has little relation to their countries of origin, it is also unlikely that regulation at a national level would be effective, or functionally coordinated between countries.
By self-regulating, national governments would be much more likely to accept the burden being lifted from their legislative shoulders, so long as the outcomes ensured consumer safety as effectively as possible. And by removing the motivations and justifications of government interference, the cryptocurrency industry could gain the level of stability and trust that is crucial to its early and efficient success.
So
I'm openly calling for a consortium to self-organise, invite all the relevant stake holders, model itself on successful self-regulating organisations, establish a standards and certification authority, and let market forces be the ultimate consequence of failing to gain accreditation and comply with their established standards.
Then
consumers can invest with confidence in projects that meet standards and have attained certification. Or they can knowingly risk their money on projects that failed to gain certification and forego their right to complain about being swindled by their greedy investments. In such an established environment, all that national governments would need to do, is monitor the consortium, and recommend that citizens avoid investing in projects that failed to gain certification by the cryptocurrency certification board.
I would like to see DNotes take a responsible position in promoting and guiding the development of such a consortium.
Thanks, Tim. I read the article and like it a lot. A self-regulating global association for our industry sounds intriguing. It would be amazing for DNotes to have the honor to the leadership role but that is a huge undertaking. It may make more sense for the current Digital Currency Council to evolve into such an organization:
