(Newswire.net — October 15, 2019) — The beginning of 2019 had been marked by a new wave of optimism in the cryptocurrency, with the global market cap managing to rebound from the lows. News surrounding Facebook and its stablecoin project had supported valuations in the first phase, but once it became official, a new wave of regulatory scrutiny emerged.
Because of that, regulators in both the US and the EU had already taken a tough stance on the idea of cryptocurrency and given the size of Facebook’s user base, we could witness an acceleration in regulation for crypto exchange platforms, blockchain-based startups, investors and individuals wanting to use digital assets on a daily basis.
EU scrutiny on Facebook’s Libra
This isn’t the best time for Libra, after it recently lost PayPal’s backing, with the social media giant now getting ready to answers questions coming from EU regulators. The latest news is showing that the European Commission made a request on the matter towards Facebook and the Libra Association.
EU’s financial commissioner Valdis Dombrovskis is one of the main figures wanting to assess whether Libra should be regulated by the European Union if new regulation is required, or whether the stablecoin should be allowed to function, according to a recent article published by The Financial Times.
Last month, 26 central bank officials had questioned Libra founders on their project, the first time the social media giant had to face such an action. In August, Brussels’ antitrust body raised another concern, claiming that it could create competition restrictions.
US and nuanced cryptocurrency regulation?
To cool things down a little, not all people have this hard stance on cryptocurrency regulation and a good example with that respect is Harold J. Ford, a former US Congressman who argued that lawmakers should have a more nuanced approach on this matter. According to an article published on CNBC on September 5th, he also claimed that regulation for cryptocurrencies and regulation for Facebook’s Libra should be two different things.
He continued to emphasize that the lack of regulation in the cryptocurrency industry acts as a brake on innovation, offering examples like Belarus, Malta, and Bahrain, who are already working on this issue.
Last month, the Financial Integrity Network (FIN), an advisory firm based in Washington D.C., urged the US Congress to regulate companies in the cryptocurrency industry under the Bank Secrecy Act (BSA). The argument showed by David Murray, FIN’s vice president, has to do with some virtual asset providers regulated as money transmitters, while others not regulated.
In order to bring equanimity among all companies operating in the industry, it’s obvious that rules must be set into place. Fully-aware of this issue, it looks like lawmakers around the world can’t find common ground on the matter and the chatter continues with the same rhetoric.
SEC and its role in crypto regulation
On September 24th, The House Financial Services Committee (HFSC) held a hearing called “Oversight of the Securities and Exchange Commission: Wall Street’s Cop on the Beat”. Five SEC commissioners sat in front of the HFSC and Chairwoman Maxine Waters had continued to express her concerns on Facebook’s Libra project:
“I’m very concerned about Facebook’s plan to create a digital currency Libra and digital wallet Calibra. It appears that Facebook is working to create a global financial system that is intended to rival the U.S. dollar…I hope to hear what steps the SEC has taken is doing to ensure that Libra is appropriately and rigorously regulated.”
Some like Harold J. Ford, Republican lawmakers had asked for regulatory clarity on digital assets, in order to avoid a rapid innovation flight from the US. The UK and Singapore had been the countries given as examples, currently having an edge over the US when it comes to regulation for cryptocurrencies.
This entire debacle does not solve the issue and instead, it draws more shadow on the future path. Businesses and investors had always asked for clarity and predictability from politicians and since those two important requirements are not met, big investments into cryptocurrencies could turn out to be catastrophic. That’s the main reason why companies are relocating to areas where dealing with cryptocurrencies is done based on laws.
Summary
The conclusion is that at a point in time, we’ll have regulation in both the EU and the US, with no projected path on the matter at this point. The European Parliamentary elections had ended and the new Commission will start to work on November 1st. The situation is more delicate in the US, where Congress is divided and we’re getting closer to the 2020 Presidential Election. Adding the impeachment inquiry launched on President Donald Trump just confirms that US citizens will need to wait more time until regulation for digital assets will finally be passed into law.