Charles Hoskinson Testifies at Crypto Hearing

Most people remember the classic Frank Capra film “Mr. Smith Goes to Washington.” 

In it, a young idealistic Senator (Jimmy Stewart) goes to capitol hill to fight a corrupt political establishment. After undergoing many trials and tribulations, he eventually succeeds in exposing his enemies and winning the day. 
A battle is currently being waged between two regulatory agencies: the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The SEC, headed by Gary Gensler, appears to be more hostile towards cryptocurrencies. 

This is especially true when it comes to altcoins (any cryptocurrency that is not Bitcoin). The SEC wants to classify altcoins as securities rather than commodities. This could be very damaging to the crypto industry in the short term as none of the 20,000+ altcoins in existence are registered as securities. On top of that, none of the exchanges trading them are licensed to buy and sell securities either. 
I think that Bitcoin is safe as it is considered a commodity by just about everyone, including the SEC. 
But if the hammer comes down hard on altcoins we could see a lot of turmoil ahead for the cryptocurrency market. Exchanges would also face potential lawsuits and/or regulatory pressures as they struggle to comply with changing laws. 
The two current crypto bills – The Digital Commodity Exchange Act and The Responsible Financial Innovation Act – are both hopeful for the crypto industry. They clarify the definitions of various crypto terms and, more importantly, give the CFTC jurisdiction over most cryptocurrencies. 
This is good news for a variety of reasons but the most important is the CFTC’s pro-crypto stance as well as their favorable stance on altcoins – recognizing most of them as commodities.
In June, the U.S. House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit put together a hearing on cryptocurrencies. This was seemingly thrown together last-minute as the press release for it only came out about a week before the hearing itself. And the list of witnesses wasn’t released until the actual day of the hearing.
The most notable among these witnesses was Charles Hoskinson, the co-founder of Ethereum and founder of Cardano – an up-and-coming Ethereum competitor blockchain.

Charles Hoskinson, the co-founder of Ethereum and founder of Cardano – an up-and-coming Ethereum competitor blockchain.
In his opening statement, Hoskinson called for regulators to work with cryptocurrency companies and made the case for principles-based regulation. He likened cryptocurrencies to stem cells – noting that they can be many different things over the course of their existence. 

This is what makes regulating them challenging.
Which is why it’s better to apply regulations to the centralized entities themselves rather than decentralized coins and tokens. I quite agree with this. And it seems like almost everyone there did as well.
It was heartening to see how pro-crypto this subcommittee was. Virtually everyone present was extremely positive about cryptocurrencies. 
Let’s hope that the CFTC continues to lead the charge for positive and sensible crypto regulations moving forward. 

A tough battle lies ahead between the entrenched forces of traditional finance and government and the future of innovation and decentralized finance. 
I covered this topic, and many more, in-depth in my Q3 “Crypto Call-in,” which we held last week for members of my Crypto Cycle publication. A recording of it is up now on the members’ site. You can get access here. 

Chris Curl

Chris Curl
Editor, Daily Profit Cycle