By: Alvaro Maranon
Bitcoin’s popularity has gathered global momentum over the past year, with its unprecedented increase in value that saw its all-time high break the $20,000 mark. With money being made, two questions naturally arose – what exactly are cryptocurrencies and how can they be regulated to protect the players involved? Cryptocurrencies became possible with the development and creation of the Blockchain, and subsequently led to the development of Bitcoin and other cryptocurrencies, ranging from alternative fiat-based currencies to a satirical open source peer-to-peer digital currency based upon the use of Shiba Inus.
On February 6, 2018, the Committee on Banking, Housing, and Urban Affairs held an open session solely focused on Virtual Currencies and the oversight role of the SEC and CFTC. The Chairman of the SEC, Jay Clayton, and the Chairman of the CFTC, Christopher Giancarlo, acknowledged the rapid development and importance of the cryptocurrency market but in turn cautioned investors of the dangers with it being unregulated. Mr. Clayton identified three main takeaways: 1) these are not “currencies” in the traditional meaning and are closer to securities; 2) Initial Coin Offerings (ICOs) have not been registered with the SEC and will be considered as the sale of securities; and 3) be weary of ICOs as they are prone to money-laundering schemes, digital hacks, and “pump and dumps.” Ultimately this hearing marked the first of many hearings aimed at informing regulators of the landscape and how to regulate it.
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