Responding to recent bitcoin price volatility, former financial services regulator Bart Chilton has strong words for the cryptocurrency industry: accept oversight or die.
The former commissioner of the Commodity Futures Trading Commission (CFTC) published this warning in a CNBC op-ed. Chilton, who last year called for then-President Obama to regulate digital currencies, claims that bitcoin-holders with deep pockets are manipulating the bitcoin price to prevent it from collapsing in the wake of China’s crackdown on cryptocurrency. Noting that the bitcoin price had climbed more than $800 following its dip below $3,000, he stated:
There’s no rational reason for such moves other than some are efforting (successfully, to date) to buoy prices and calm otherwise edgy and excitable bitcoin investors.
“As a financial regulator for years, I was tough on enforcement and always a consumer/investor advocate,” he added. “There’s no questions—zero—that had digital currencies been regulated, I would have sought an investigation into the precipitous price changes we’ve witnessed.”
He warns that without regulation, investors will not be protected from these market manipulations. If the industry continues to resist oversight, this “blind spot” will eventually lead to sweeping regulations that could stifle innovation within the digital currency space. Pointing to the recent events in China, he encourages the cryptocurrency community to heed this “clarion call”:
The Chinese actions should send a clarion call to digital enthusiast that they need to have some basic regulatory oversight. Rather than waiting for governments to take actions that thwart the development of digital currencies, they should lead efforts to put in place appropriate regulatory oversight for these new and innovative financial technologies.
U.S. regulators have not taken these drastic steps yet, but they have begun to turn their attention to the burgeoning cryptocurrency space. The Securities and Exchange Commission (SEC) has already pressured at least one initial coin offering (ICO) to shut down and has suspended several publicly-traded bitcoin firms.
Some industry leaders believe regulation is an important step in the ecosystem’s maturation, but others fear it is a siren’s call. They point to New York’s infamous BitLicense, along with the regulatory framework recently passed by Washington state, as evidence that regulators tend to act with a heavy hand that forces many startups to shutter their operations within the regulated areas.
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Last modified: May 21, 2020 9:13 AM UTC