Hoskinson Proposes Crypto Self-Regulation To CongressJune 24, 2022
Cardano founder and CEO, Charles Hoskinson, met with the US House of Reps committee on blockchain and crypto to discuss matters relating to the industry. While speaking at the meeting, Hoskinson proposed that it is suitable for Congress to establish guidelines. However, the best way to make crypto companies comply is by involving crypto software developers.
Hoskinson’s Crypto Self-Regulation Proposal
According to the Cardano founder, the banking industry’s running of KYC-AML is an example of what he is proposing. He added that the SEC and CFTC do not perform KYC-AML. Instead, it is the banks that serve that responsibility.
He further explained, saying, “what I suggest is a public-private partnership. The crypto industry needs regulations. But software developers can write the code to make the guidelines work.” It is on record that the SEC and the CFTC have been struggling with each other to become the sole agency to oversee the affairs of the crypto space.
In his opinion, Georgia’s republican RepAustin Scott, claims that CFTC and the SEC can’t regulate the crypto space even if they join forces together. Rep. Scott believes these two agencies don’t have sufficient human resources to regulate the crypto space.
However, the Cardano founder and CEO countered the rep’s claims. Hoskinson argued that there could be automations of compliance with regulations.
Hoskinson further explained that digital currencies could have the capability to store and transfer data. Hence, they can be programmed to automate compliance with regulatory policies.
He used this explanation to buttress his previous proposal of a self-regulated crypto industry. According to him, establishing a self-regulating organization (SRO) is an ideal option that Congress could consider.
Hoskinson explained that the SRO would work like the way the private banking industry works in compliance with regulations. The Cardano founder added that the SRO would have an automated “self-certification system.”
Hoskison added that it is possible to automate this system to track compliance. He also said the system would only stop working when it encountered an error. When the system encounters a mistake, a financial authority will now get involved to complete the review manually.
Using a hypothesis of an IRS audit for Americans, Hoskinson explained why staffing isn’t a factor in crypto regulation. According to Hoskinson, a 4x the size of the current IRS staff won’t mean they can audit every American. Hence, what is needed in regulating crypto isn’t more human resources. Instead, a system is what is required.
Enabling Digital Assets For Payment Purposes
Representative Scott also argued about avoiding fraud in using cryptos for payment purposes. Hoskinson explained that it is possible to program the system to prevent digital assets from being used to settle payments.
But he added that there could be separate legal checks before cryptos can be enabled for such purposes. Hoskinsons’ submissions at Congress hint that he would be willing to join the regulators in developing new guidelines for the crypto space.