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Without Bitcoin, There Would Be No Blockchain: CFTC Chairman Tells US Senate

Last Updated March 4, 2021 5:04 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:04 PM

The chairmen of two top US market regulatory agencies largely stuck to the script during Tuesday’s Senate hearing on potential cryptocurrency regulations.

The hearing, which was held by the Senate Committee on Banking, Housing, and Urban Affairs, touched on a broad range of regulatory concerns related to cryptocurrencies and blockchain technology, including initial coin offerings (ICOs), trading platforms, derivatives and exchange-traded funds (ETFs), and the assets’ perceived use to perpetrate financial crimes and subvert international sanctions.

In their opening statements, both Clayton and Giancarlo expressed concern about the fact that cryptocurrency exchanges are currently regulated at the state level rather than the federal, and each reiterated that, at some undefined point in the future, Congress may want to increase federal regulators’ ability to oversee the spot markets.

Jay Clayton, chairman of the Securities and Exchange Commission (SEC), continually shifted the conversation back to ICOs, noting that he has not seen an ICO that should not be classified as a security under federal regulations — a statement he has repeated on several past occasions.

He also provided insight into why the SEC has resisted fund sponsors’ attempts to list Bitcoin ETFs, explaining that because ETFs primarily target retail investors and are largely one-sided markets, rules governing their creation must be more strict than those for futures contracts, which are overseen by the CFTC. He said that, if these rules are satisfied at a later date, the SEC will then be open to reviewing its stance on Bitcoin ETFs.

Chairman Giancarlo, meanwhile, won the hearts of Bitcoin enthusiasts with several comments that appeared to be hat tips to the community. First, he made what is almost certainly the first use of the word “hodl” during a Congressional hearing. Then, toward the end of the hearing, he contradicted the common misconception that Bitcoin is riding the coattails of blockchain technology.

He told the committee:

“It’s important to remember that if there was no Bitcoin, there would be no blockchain.”

Altogether, the hearing may not have led to any bombshells, but it confirmed what has already been made apparent: new cryptocurrency regulations are likely coming to the US market.

“We may be back with our friends from the U.S. Treasury and the Fed to ask for additional legislation,” Chairman Clayton said during the hearing, and — based on the tone of questions from individual committee members — legislators are likely to give it to them.

Featured image from YouTube/CFTC.