Experts warn, and warn the SEC and Congress: rigid regulation will harm the blockchain industry.
It is known that governments make bad rules that harm industries, as well as implement rules that often lead to unexpected negative outcomes – consequences that significantly deviate from the original intention of the new rule. And this is the main reason why software developers have developed Bitcoin (BTC) and other complementary medium of exchange in the first place: to make snooping intermediaries obsolete, when it comes to the transaction block chain. This week’s group of experts on bitcoins and financial Affairs warned the Commission on securities and exchange Commission (SEC) and policymakers about how to not short-sighted to impose rules that instead of help, in fact harm the growing cryptocurrency market at $ 220 billion and reduce the benefits that crypto and blocky to provide.
Brain Bishop, former managing Director of Morgan Stanley’s Caitlin long and other well-known experts in a joint letter of 19 September wrote that the new rules adopted by the politicians and bureaucrats who do not have a complete understanding of the FINTECH, can introduce risks in the cryptographic and financial markets that otherwise would not exist. Bad rules will reduce the benefits of innovation and harm to investors in this way. The group also urged the SEC and policy makers (Congress) to modernize its regulatory framework, which does not have the ability to properly manage digital assets.
You should consult with experts in cryptography
“Current SEC rules relating to the storage, do not reflect the risks inherent in managing digital assets, and don’t use the technical advantages of the technology. These technical advantages can lead to the creation of a stronger and more reliable storage environment, ” write the experts. “To better understand these opportunities, to build the strengths of the technology and do no harm to its benefits, we encourage the SEC to interact with those who have experience with technologies such as cryptographic engineers, software developers, exchanges bitcoins, the developers of smart contracts , blokcing existing developers and managers of digital assets to ensure the implementation of best practices.”
The experts urged the SEC and policy makers to set new rules and make them suitable for innovative class of assets that has unique strengths and features, not to create or implement General rules that are more suitable for traditional assets. In their view, lack of congruence would harm the industry and investors.
Not to apply existing rules to a new asset class
“We suggest that policymakers and regulators have considered the benefits of existing technologies and incorporated them into the rules and regulations and not only relied on the current rules and regulations that were developed for traditional assets.” They add: “the securities Laws were originally written to refer to paper securities, later adapted to the input form of the book, and now digital representations of the rights to security, recorded in centralized databases. They were not written from a purely digital assets, such as CryptoMemory “.
Risks include the consolidation of digital assets in the accounts of leasing, creating a huge incentive for hackers to steal. This is due to the fact that bitcoin and other cryptomelane are instruments in bearer form. Document media, such as lottery tickets, means that the owner of the private key owns the coin always, regardless of whether they were lost, stolen, mistakenly delivered or received as compensation for illegal activities. Because digital coins were designed to remove third parties from the transaction, it is necessary that regulators took into account these technological functions.
The experts also argued that the regulators should not stifle the ability of encryption to protect investors and to provide investors with the freedom of cheap movement of their assets. “We can create a safe model for digital assets that protect both the investor and the solvency of major financial institutions without sacrificing the convenience and innovation that can provide asset class”