Concerned citizens have written a letter to the SEC detailing the dangers of adoption without well-researched and modern regulations.
Although nearly 10 years old, the cryptocurrency industry can still be viewed as a new one. Last year saw terms like Bitcoin and blockchain creep into everyday conversation, showcasing how popular it is really becoming.
While regulations are arguably seen as a solid step toward adoption, the development and implementation of them seem to have some in the industry on edge. Live Bitcoin News recently reported on the lack of speed with regard to the creation of clear guidelines. Now, Forbes has shown that another collaboration has been organized whose focus is on the US Securities and Exchange Commission (SEC).
Dear SEC…
A letter was recently addressed to the SEC which detailed the care that needs to be undertaken to ensure that the advantages of Bitcoin remain just that. It also urged collaboration between the commission and crypto engineers to develop the correct regulations for the industry, a sentiment recently echoed by the newly-formed Blockchain Association.
One of the authors, Bitcoin Core developer, Bryan Bishop, explained:
Bitcoin is fundamentally a technological system with many nooks and crannies. It’s the concept that rules can be enforced using software, math and cryptography rather than policy.
The rest of the authors of the letter are a refreshing mix of both industry experts and well-known professionals in the traditional financial sector. These include former managing director of Morgan Stanley, Caitlin Long, e-commerce coding trailblazer, Christopher Allen, the founder of Ernst & Young’s blockchain team, Angus Champion de Crespigny as well as fund manager attorney Gavin Fearey.
Bakkt Needs to Beware
Caution was also encouraged regarding the Intercontinental Exchange’s (ICE) goal to launch its own crypto exchange, Bakkt. Reference was made to the creation of a honeypot. In this instance, storing all of the clients’ bitcoins in one central place to subsequently lend out or invest would be seen as comingling, which could possibly devalue Bitcoin. It could also create a honeypot to entice all of those busy Bitcoin-thieving bees out there.
Essentially, the authors feel that if Bakkt will be operating on pre-crypto and more traditional processes, the results could be negative:
Digital assets are natively segregated, and maintaining this natural segregation at all times would best protect investors by conforming to the architecture of digital asset technology.
Long summed it up quite succinctly:
Don’t treat bitcoin like a normal financial instrument—it’s not. Don’t apply old rules to the new system.
Ushering in a New Partnership
The letter ended off with another word of warning and on the benefits of working together:
We believe that current SEC rules surrounding custody do not reflect the risks inherent in managing digital assets and do not use the technical strengths of the technology. These technical strengths have the potential to lead to a stronger, more robust custody environment. To better understand these possibilities, to build to strengths of technologies, and to not harm its advantages, we recommend that the SEC engage with those who are experienced with technology, such as cryptographic engineers, software developers, Bitcoin exchanges, smart-contract designers, blockchain developers, and existing digital-asset managers to ensure best practices are implemented.
Now we wait to see if authorities will take the help that is so freely and desperately offered to them. To make the best decision, you need all the information. It stands to reason then that to make the most beneficial regulations, you need the input of all parties that will be affected.
Do you think the SEC and ICE will heed the warnings in the letter? Will they accept the help being offered to them? Let us know in the comments below!
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