Cryptocurrency Regulation Should "Do No Harm" According to US Regulator

In an interview at the annual Singapore Summit, U.S. Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo said that:

When it comes to the oversight of cryptocurrencies, regulators need to avoid inhibiting innovation, yet be vigilant against manipulation.

J. Christopher Giancarlo

From his perspective, a reason the internet succeeded was because the government was not too heavy handed with its regulatory approach, particularly in its nascent stages. Instead, it took a simple “do-no-harm” approach.

He suggested that the CFTC - which is responsible for crypto regulation in the United States, where cryptocurrencies are classified as commodities - should take the same approach for cryptocurrencies.

Still, Giancarlo himself recognized that a challenge to this approach is the risk of corruption and fraud, which are rampant in the crypto community. He thus emphasized the importance of being “slow and well-informed” while creating regulatory policies for cryptocurrencies.

Giancarlo is a strong believer in the potential of cryptocurrencies. In a written statement to the US Senate Banking Committee, he highlighted the potential of blockchain to:

enhance economic efficiency, mitigate centralized systemic risk, defend against fraudulent activity and improve data quality and governance.

J. Christopher Giancarlo

It appears that it is the promise of this frontier technology that encourages him to take a less aggressive approach to its regulation, allowing significant room for innovation and creativity. Advocates of the “do-no-harm” approach cite the unsuccessful New York ‘BitLicense’ which ultimately led to crypto talent leaving the state to seek stats with less regulatory friction.

This should be reassuring for those who worry that over-regulation could hinder cryptocurrency technologies from reaching their full potential.

Japanese Lawmakers Propose Digital Yen over Concerns Surrounding Libra, China

A group of Japanese lawmakers has started working on a proposal for Japan to issue its own digital currency over concerns surrounding Facebook’s Libra and China’s upcoming digital yuan.

According to Reuters the cryptocurrency, a digital equivalent of the yen, would be a joint initiative between the country’s government and private companies to put Japan “in tune with global changes in financial technology.” Speaking to the news agency Norihiro Nakayama, parliamentary vice minister for foreign affairs, stated:

The first step would be to look into the idea of issuing a digital yen… China is moving toward issuing digital yuan, so we’d like to propose measures to counter such attempts.

The group of lawmakers, comprised of about 70 Liberal Democratic Party members, is led by former economy minister Akira Amari, and plans to submit a proposal to the government as early as next month.

Reuters notes that Japan is unlikely to issue its own digital currency any time soon as there are technical and legal barriers to overcome, although the move comes as the Bank of Japan, the country’s central bank, joined six other central banks to share expertise on creating digital currencies.

The report adds that Shinzo Abe, the country’s Prime Minister, recently told parliament the government will work with the Bank of Japan in studying digital currencies and “ways to enhance the yen’s convenience as a settlement means.” Some Japanese lawmakers, it says, voiced concerns over China’s move to expand the yuan’s influence as a settlement currency.

A former board member of Japan’s central bank, Takahide Kiuchi, was quoted as saying:

The BOJ probably won’t want to do anything that would stifle private-sector innovation. The best way could be to issue a hybrid-type digital currency that is operated and issued by private firms, with the central bank’s involvement.

Kiuchi noted he believes China and Japan have different motives to issue their own cryptocurrencies. While china ants to enhance the yuan’s influence, Japan would be trying to change its cash-loving culture.

Japan, it’s worth noting, has been accepting bitcoin as legal tender since April 2017, and is home to various prominent cryptocurrency businesses.

Featured image via Unsplash.