Coinbase’s tussle with the U.S. Securities and Exchange Commission (SEC) highlights the need for clearer rules for digital assets, according to former Commodity Futures Trading Commission (CFTC) Chairman Chris Giancarlo.
In an appearance on CoinDesk TV’s “First Mover” Thursday, the regulatory veteran, nicknamed “Crypto Dad” for his favorable views of the technology, described the current rules as anachronistic and unevenly enforced.
“The chairs [of regulatory agencies] have a fair amount of discretion in terms of applying rule sets,” Giancarlo said. “It’s important for this new innovation that we don’t apply 90-year-old statutes, which is effectively what we have.”
His comments come in the wake of Coinbase’s revelation that the SEC threatened to sue the cryptocurrency exchange should it introduce a proposed savings account-like product. Coinbase said it disagreed with the agency’s contention that the product would meet the definition of a security. Uniswap Labs, the development group behind a decentralized competitor to Coinbase, also is reportedly under investigation by the SEC.
“Ultimately, it will be the courts that will have to determine jurisdiction and apply the security laws to these asset classes, and I’m optimistic that Congress steps in,” Giancarlo said in response to a question about Coinbase’s situation. “Congress in the last few months has really recognized crypto [...] and has woken up to this technology and its power and potential.”
Coinbase also claimed that it had approached the SEC for feedback on the proposed product and never got any feedback until the agency opened an investigation.
Perhaps in reference to this, Giancarlo said Thursday that “dialogue is critically important.”
BlockFi and digital dollar
Addressing his recent departure from the board of embattled crypto lender BlockFi, Giancarlo explained that he simply had too many projects going on and needed a “portfolio rebalancing.”
He noted that he remains an adviser to BlockFi and said he will help the firm navigate the scrutiny it’s receiving from regulators.
Giancarlo has been one of the key directors for an Accenture-backed project advocating for a digital dollar and publishing white papers exploring the different design considerations since last year.
On Thursday, he reiterated that the United States needs to be thinking about a digital dollar, not just as a payment system but as a way of “ringing out costs from the U.S. economy.” It should be looking to stablecoin developers and learn from their years of experience, he added.
“Right now, the United States is leading from behind and there’s unfortunate ramifications that we continue on that course of being not a leader but a lagger in that development of digital money,” Giancarlo said.
Broadly, Giancarlo framed cryptocurrency as a salutary force in financial services.
“This innovation presents the opportunity to solve some of the worst elements of our existing structure […] its slowness, its expensiveness and, most unfortunate, its exclusiveness,” he said. “We need to see it as revolutionary and be willing to be flexible with our existing models and look to this innovation to modernize shortcomings.”
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