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- CFTC Advisor Chris Perkins said the current regulatory situations are making the U.S. lose the crypto race.
- Perkins released a regulatory white paper suggesting principle-based regulations.
Advisor to the Commodities and Futures Trade Commission (CFTC) and president of crypto-focused VC CoinFund, Chris Perkins, released a regulatory white paper. With its current regulatory scenario, Perkins believes that the U.S. needs to catch up in the crypto race. After the FTX-saga, these federal regulatory institutions are under renewed pressure to clarify regulations that govern cryptocurrency.
The United States and Its Ambiguity Regarding Crypto
The U.S. Securities and Exchange Commission (SEC) and CFTC are the two bodies expected to develop crypto regulations. The long running SEC v Ripple case and other cases of enforcement where the enforcement agency accused platforms or issuers of unlawfully trading in securities create a scenario of ambiguity among crypto companies and investors regarding the future of crypto in the country.
Chris Perkins is a member of CFTC’s Global Market Advisory Committee (GMAC) and argues that other jurisdictions are opening up, grabbing opportunities, and acting positively to embrace crypto. CoinFund recently sent a team to Hong Kong to study their crypto scenario. Perkins said in an interview that HK Government officials are actively participating in crypto conferences and encouraging its adoption in the country.
Hong Kong will develop a new licensing regime and crypto regulations by June 2023. The European Union’s MiCA is supposed to come with crypto regulations for the bloc soon. Any country that would come up with the best rules for crypto would be regarded as a pioneer in the sector and will be followed.
Regulatory Principles to be Followed
Chris Perkins released a white paper suggesting the principles to be followed while making crypto regulations. It states that the legislation should be at the foundation of a digital financial policy. Moreover, the statute should strengthen the regulators to bring principle-based rules. These should eliminate the jurisdictional ambiguity among regulators.
The principle-based regulations should follow; client asset protection and transparency where the assets are protected from malicious activities, and the safety and security of the assets shall be visible to investors. Potential risks involved should be disclosed to the client beforehand. Emphasis should be placed on cost-effectiveness; Uniswap and Circle suggested that on-chain costs could be reduced by around 80%.
Investors from any financial or demographic background should be allowed to invest; this would increase customer inclusivity. Engaging clients in the decision-making process through voting, as in DAOs, makes them feel essential and fuels adoption.
Privacy should be respected and not viewed as a threat, blockchain technologies are transparent by nature, but compliance with AML and KYC hampers this scenario. Regulations must be clear enough to understand and follow, and they should encourage adoption.
Regulators could encourage Sandboxes and safe harbors for programs for experimentation. The public should have a reasonable commenting period to submit their suggestions. Regulations must have zero tolerance for fraud and illicit activities; a harsh course of action is necessary for the current scenario.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
