Today, Coinbase mentioned that the establishment of a new cryptocurrency regulator by the Congress is not a good idea.
Coinbase chief legal and risk officer, Mike Lempres said, “Federal regulators already have sufficient authority.”
“Although, it is important to clarify where one regulator’s authority ends and another begins for consumers and exchanges,” reported Lempres to a House Financial Services Committee hearing in his testimony.
He also mentioned that Coinbase is already under many federal regulators such as the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Federal Trade Commission and the Financial Crimes Enforcement Network (FinCEN).
The San Francisco-based digital currency wallet and exchange company has to follow the guidelines of licensing agencies in 38 states to operate lawfully, added Lempres.
The solution Lempres proposed is to have a better coordination and communication between each regulators to know what each one has to deal with. As mentioned in his testimony:
“Today’s environment calls to mind the parable of the blind mice and the elephant – each agency looks at tokens from its own narrow perspective:
- the SEC says these assets, particularly ICO’s, are probably securities;
- the CFTC says tokens are commodities, unless they are securities;
- the IRS says they are property;
- FinCEN says tokens are money; and
- other agencies see tokens through their own lens.”
The main reason explaining Coinbase’s success is that they have always followed government guidelines.
Lempres told the hearing that Coinbase only had four cryptocurrencies to trade on its GDAX exchange that are Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
He also added that these cryptoassets are considered as virtual currencies, not securities, which is why Coinbase is patient before adding new cryptocurrency to its wallet.
There were also other opinions that were mentioned in the hearing.
One of them came from Brad Sherman, Liberal California Democratic Representative who mentioned in the hearing that cryptocurrencies are a scam: “Cryptocurrencies are a crock. They help terrorists and help startup companies commit fraud.”
On the other hand, on a more optimistic tone, Bill Huizenga , Michigan Republican Representative said that he will not sit ‘idly’ by if more protection for cryptocurrency consumers is necessary. He also mentioned Initial Coin Offerings (ICOs) are a good thing for cryptocurrency investors since it gives them the chance to better diversify their assets.