Brian Quintenz, a commissioner with the Commodity Futures Trading Commission (CFTC), has called for self-regulation in crypto industry.
The call was made by the commissioner at the Yahoo Finance All-Markets Summit. Brian said that the crypto industry should form what’s known as a self-regulatory organization, or SRO, similar to those that exist in other areas of the financial world, while the government tries to figure out what exactly to do about Bitcoin and over a thousand other cryptocurrencies.
The crypto SRO could imitate or adopt the Financial Industry Regulatory Authority (FINRA) structure that oversees more than 4,500 brokerage firms in the U.S.,
Regulation is a complex issue. Many feel the true virtue of cryptocurrencies is the ability to work outside of government regulation and the complicated rules that govern most financial markets. On the other hand, some see regulation as inevitable and say it’s in the industry’s best interest to be proactive and accept — or even promote — sensible regulation.
At a Senate hearing on February 6th, the heads of the CFTC and the Securities and Exchange Commission (SEC) expressed both enthusiasm and alarm at the rapid rise of cryptocurrencies and associated industries. One thing the regulators pointed out was that there are no “safety nets” for cryptocurrency exchanges the way there’s FDIC insurance for bank deposits. But they also said new forms of currency represent worthwhile financial innovation, suggesting they need to be properly regulated.
Currently, both the SEC considers cryptocurrencies to be commodities, while the CFTC has considered changing its approach. While the Internal Revenue Service (IRS) requires that gains from cryptocurrency are also subject to federal income tax rules. States have some jurisdiction, too, further muddying the picture — basically, there’s a lot of overlap and it’s not completely clear who should, in fact, have the final say. In the meantime, as Quintenz advised, perhaps the industry itself should take the reigns.