Hoskinson presents software-enabled cryptocurrency self-regulation to Congress

Cardano co-founder Charles Hoskinson told Congress he should enact regulations for cryptocurrencies, but leave compliance to software developers.

Hoskinson compared the ideal arrangement for cryptocurrency regulation to how banking self-regulation works at a conference on June 23. hearingtelling lawmakers “it’s not the SEC or the CFTC doing KYC-AML, it’s the banks.”

“It is a public-private partnership. What needs to be done is set those boundaries, so what we can do as innovators is write software to help us make it happen. “

The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are two of the financial regulators fighting for the jurisdiction of the cryptocurrency industry.

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Republican Representative Austin Scott of Georgia said neither the SEC nor the CFTC have the manpower to oversee the thousands of cryptocurrencies on the market, saying “it is not possible to regulate all of these currencies.”

Hoskinson responded that cryptocurrencies’ ability to store and transfer data meant they could do much of this regulatory work automatically. She also used it as a justification for allowing the cryptocurrency industry to create self-regulatory organizations (SROs) to drive regulatory compliance, as does the private banking industry.

Hoskinson suggested that the industry could create a “self-certification system” that can automatically monitor compliance until an anomaly is detected, at which point a financial authority will review it.

Further illustrating why manpower shouldn’t be a problem for cryptocurrency regulation, Hoskinson speculated that even quadrupling the size of the Internal Revenue Service (IRS) wouldn’t be enough to control every American.

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Rather, Hoskinson told Rep Scott that cryptocurrencies can be programmed to prevent transaction settlements until legally required checks are done.

Hoskinson testimony dated June 23 released via IOHK website has shown that he is keen to work with federal regulators on developing new rules, stating that compliance with outbound US regulations and legislation “must be a guiding value for the blockchain industry.”

“However, this is a new technology and a radically new asset class that cannot easily fit the boundaries of the laws and tests created nearly a century ago.”

Hoskinson’s calls for clearer boundaries in the cryptocurrency regulatory landscape echo those made by other insiders in the United States last December. SEC Commissioner Hester Peirce recently blamed a lack of regulatory clarity for the SEC that it consistently rejected the launch of Bitcoin spot exchange-traded funds (ETFs) in the United States.