It has been only less than 48 hours since the news of a letter written by leading crypto experts to SEC asking for upgrading the regulations to fit in cryptocurrencies has surfaced, and it has already started receiving support from other analysts and industry veterans. The latest names who have come in support of it are Morgan Creek Digital’s founder and partner, Anthony Pompliano and blockchain expert and board member of 9Spokes, Thomas Power.
Industry backs upgradation of law
Crypto experts and analysts have added their opinion to the recent proceedings with the SEC delaying decision on the VanEck/SolidX Bitcoin ETF proposal by submitting their views of having an upgraded regulatory framework for accommodating cryptocurrencies. Of several recommendations made to the SEC, Bitcoin Core’s developer Bryan Bishop argued that the biggest change the SEC should bring about is to implement policies and regulations directly in partnership with cryptocurrency engineers. The letter quoted
“We recommend that the SEC engage with those who are experienced with technology, such as cryptographic engineers, software developers, Bitcoin exchanges, smart-contract designers, blockchain developers, and existing digital-asset managers to ensure best practices are implemented.”
In addition to being a co-author of the letter, Brian bishop had was also quoted by Forbes saying
“Bitcoin is fundamentally a technological system with many nooks and crannies, It’s the concept that rules can be enforced using software, math and cryptography rather than policy”
The comment and voice have found backing of other crypto experts as well. When asked by media about this suggestion put forward by Bryan Bishop Morgan Creek Digital’s founder and partner, Anthony Pompliano said ‘of course’ in agreement. He added that he did not know whether the SEC would have considered these suggestions and did not comment further on the proceedings taking place.
Echoing Anthony Pompliano sentiment, blockchain expert and board member of 9Spokes, Thomas Power also agreed with Bryan Bishop’s claims on the basis of ‘logic’ but refused to see the historical evidence behind such a move coming to exist.
Upgradation of regulation necessary said the letter to SEC
The group of Industry experts and veterans comprising of Bitcoin core developer Bryan Bishop, former Morgan Stanley managing director Caitlin Long, e-commerce coding pioneer Chris Allen, founder of Ernst & Young’s blockchain team Angus Champion de Crespigny and fund manager attorney Gavin Fearey, in an letter to SEC had put forward their intent to assist the SEC by disclosing what they feel are critical considerations for handling cryptocurrency regulation that was not addressed in other comment letters previously made public by the SEC. The letter further stated that the digital assets are a unique asset class with unique strengths and abilities and if they are fitted into existing market infrastructure, there will be the introduction of risks to investors that would not otherwise exist. The group suggests that the SEC should try to possibility update the market infrastructure if it actually wants to take advantage of Bitcoin and other technology and further strengthen the financial system.
The letter had also argued to put restrictions on Bakkt, the ICE planned cryptocurrency exchange expected to launch in November. The authors stated that the process of storing all funds in a single place and lending out or otherwise investing the stored cryptocurrency could devalue Bitcoin by creating more liquidity than there are assets to back it. According to the report
“Digital assets are natively segregated, and maintaining this natural segregation at all times would best protect investors by conforming to the architecture of digital asset technology.”
It also stated
“ Commingling (of digital assets) creates a “honeypot” for hackers to attack, and the ability of financial institutions to manage this security risk is likely to vary widely”
The concerns raised by the veterans regarding current regulations and enterprises is something that can’t be overlooked and now with more industry experts and analyst backing it looks like SEC may have to break its precedents and consider an exception for this one
Will SEC up its game and upgrade the regulatory framework to accommodate cryptocurrencies? Do let us know your views on the same.