Understanding Hoskinson’s Proposal
Charles Hoskinson, co-founder of Cardano, has taken the stage in Congress to advocate for a fresh approach to cryptocurrency regulations. His main pitch? Let the software developers tackle compliance while lawmakers set the stage. No, it’s not a tech fairy tale—it’s a working model he believes could revolutionize how we regulate crypto.
A Public-Private Affair
During a recent hearing, he likened the desired arrangement for crypto regulation to the current self-regulation seen in the banking sector. While the SEC and CFTC may be battling it out over who’s in charge, Hoskinson suggests that it’s the banks themselves taking the lead on compliance matters, such as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
- Legislators define the rules.
- Innovators write the software.
- A collaborative atmosphere flourishes.
The Limitations of Regulatory Bodies
As Representative Austin Scott pointed out, even doubling the resources of regulatory agencies like the SEC or CFTC wouldn’t come close to efficiently overseeing the myriad cryptocurrencies flooding the market. Hoskinson countered this concern by emphasizing the inherent capabilities of cryptocurrencies to manage much of the regulatory workload automatically.
Self-Certification: The Future of Compliance?
Imagine a situation where a self-regulating organization (SRO) operated much like a watchdog for the crypto industry. Hoskinson envisions a self-certification system that continuously monitors compliance. If something’s amiss, that’s when authorities step in, rather than them chasing down every transaction.
Technology as a Compliance Tool
His testimony even touched on the idea that cryptocurrencies could be programmed to halt transactions until certain mandated checks are completed. Tech as a helper? Sounds like every tech-savvy parent’s dream come true! But Hoskinson believes this tech-savviness could lend itself to effective regulatory practices that the IRS, for instance, would struggle to implement in a hypothetical enhanced version of itself.
The Call for Clarity
Hoskinson concluded his compelling argument by stressing the need for clearer regulations in the crypto landscape. He opined that compliance must guide the blockchain industry’s direction, admitting that given the nascent nature of cryptocurrencies, existing laws can’t neatly contain them. And with fellow industry voices like SEC Commissioner Hester Peirce echoing similar calls for regulatory clarity, it’s clear that the quest for sensible cryptocurrency regulation is far from over.
