Cardano co-founder pitches software-enabled crypto self-regulation to US congress

What

Cardano co-founder Charles Hoskinson pitched to congress that it should make regulations for crypto but leave compliance up to the software developers

Why

Hoskinson argued the ideal arrangement for crypto regulation would work in a similar way to banking where banks themselves undertake KYC-AML

What next

A congress representative challenged Hoskinson’s proposal stating that financial regulators don’t have the manpower to oversee the thousands of cryptocurrencies on the market

The story

Charles Hoskinson, co-founder of blockchain Cardano has proposed to the US congress that crypto compliance should come from the industry itself, not from regulatory authorities.

Summarising the ideal arrangement for crypto regulation, Hoskinson likened it to the way banks currently self-regulate, telling legislators “it’s not the SEC or the CFTC going out there doing KYC-AML, it’s banks”.

“It’s a public-private partnership. What needs to be done is to establish those boundaries, then what we can do as innovators is to write software to help make that happen,” he explained.

Republican Representative Austin Scott posed that neither the SEC nor the CFTC has the manpower to oversee the thousands of cryptocurrencies on the market, saying “it’s not possible to regulate all these currencies.”

In response, Hoskinson argued that the ability of cryptocurrencies to store and transfer data meant they could carry out much of this regulatory work automatically. 

As an alternative,  Hoskinson suggested that the industry could create a “self-certification system” that could automatically monitor compliance until an anomaly is encountered, at which point a financial authority could step in to review it.

Throughout his testimony, Hoskinson explained that he was keen to work with federal regulators on developing new rules, stating that compliance with regulations and legislation coming out of the US “must be a guiding value for the blockchain industry.”

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