U.S. Congress Should Make Cryptocurrency a Key Focus

At a Congressional hearing earlier this year, a key member affirmed his intention “to not sit by idly” while the cryptocurrency investors remain unprotected.

That congressman, Rep. Bill Huizenga (R-MI), has once again called Congress for oversight of what he believes is a “muddled and fairly opaque” cryptocurrency market. A contender to lead the House Financial Services Committee, Huizenga promised to make cryptocurrency regulation his crucial agenda, if he assumes the office after the midterm elections this year.

The statement, first reported by Bloomberg, arrives in the wake of growing securities frauds, both in the U.S. and abroad. People are reportedly investing their life savings into imaginary projects backed by worthless digital currencies. An ICO market study by MIT professor Christian Catini revealed that 85% of all ICO investment has been directed at scams.

In response, U.S. and Canadian regulatory bodies have accelerated an “Operation Crypto Sweep” that targets companies found to be indulged in “crypto-scams.” By the end of May, the North American enforcement had already issued cease-and-desist letters to more than 40 local companies.

While the enforcement continues their operations, government agencies around the globe have unknowingly expressed a paradox — a puzzled stance — when it comes to regulating cryptocurrencies. A decentralized asset’s multifaceted nature, which allows it to be used as a currency, stock or even commodity, does not suit the traditional regulation standards that categorize asset classes based on their use case. Huizenga also expressed concerns over classifying cryptocurrencies, while adding that US regulators would push for a law that brings bitcoin and other decentralized assets into the categories of stock or currency.

“Everyone’s trying to figure out whether it’s fish or fowl,” he remarked. “It turns out it might be a platypus. It’s kind of an unknown or something sort of in between. How do we deal with that?”

U.S. Congress’ Divided View on Cryptocurrency
Rep. Brad Sherman bitcoin cryptocurrency
U.S. Rep. Brad Sherman has called bitcoin a “crock” and argued for a blanket ban on cryptocurrency mining. | Source: Shutterstock
Rep. Randy Hultgren (R-IL) this year had called for a cryptocurrency regulation that protects investors as much as it catalyzes technological innovation. Ted Budd, another Congressman, had also argued that the U.S. should “get it right” before coming up with any potentially rushed policy.

Rep. Brad Sherman, California, on the other hand, has publicly called Bitcoin a “crock,” arguing that the digital currency has “the ability to help terrorists, criminals, tax evaders and start-up companies looking to commit fraud.” He called for a blanket ban on cryptocurrency trading.

The year 2018 continues to be a regulatory-centric period for cryptocurrencies. As bitcoin and its peers become the critical focus in U.S. Congress, it would be difficult to expect a funambulist out of them, owing to a directionless effort. Approaching a global crypto regulatory framework, as proposed by European Commission’s Vice President, Valdis Dombrovskis, could still be an option to explore.