Coin Center: Dereg Will Hopefully Bode Well for Crypto
Coin Center is a Washington, DC-based non-profit research and advocacy center focused on the public policy issues facing cryptocurrency and decentralized computing technologies like bitcoin.
The mission is to build a better understanding of these technologies and to promote a regulatory climate that preserves the freedom to innovate using permissionless blockchain technologies. The Coin Center accomplishes that by producing and publishing policy research from academics and experts, educating policymakers and the media about blockchain technology, and by engaging in advocacy for public policy.
Director of Communications Neeraj Agrawal responded to a few questions from Block Tribune.
BLOCK TRIBUNE: Will China’s regulatory cautions on bitcoin have any spillover effects?
NEERAJ AGRAWAL: The recent regulatory moves in China mostly deal with beefing up anti-money-laundering and know-your-customer oversight for exchanges. Oversight and enforcement around these rules has been fairly strong in the United States, with China mostly playing catch-up. More exchanges abiding by AML/KYC rules in the world will ultimately make it easier for law enforcement to deanonymize the bad actors that they have been tracking through the bitcoin blockchain.
BLOCK TRIBUNE: The Winklevoss SEC decision got a lot of attention. Good or bad thing?
AGRAWAL: The Winklevoss ETF proposal was rejected because the SEC found that the significant markets for Bitcoin tend to be unregulated overseas markets that are potentially subject to price manipulation. But this creates a chicken and egg problem. How do we develop well-capitalized and regulated markets in the U.S. and Europe if financial innovators aren’t allowed to bring products to market that grow domestic demand for digital currencies like bitcoin?
BLOCK TRIBUNE: Has US government attitude to cryptocurrency changed with the new regime?
AGRAWAL: It is still somewhat early to point to any material shift in the government’s attitude toward cryptocurrencies. There hasn’t been one new Undersecretary of the Treasury, SEC commissioner, or CFTC commissioner confirmed, so a lot policy relevant to this technology is in a holding pattern. What we have seen, though, is a promise from the administration to engage in financial deregulation that hopefully will bode well for cryptocurrency regulations.
BLOCK TRIBUNE: Predictions for 2017-2018 – what do you anticipate happening in the next 6 to 12 months?
AGRAWAL: There are two policy initiative to keep an eye on this year. The first is the Uniform Law Commission’s model Regulation of Virtual Currency Businesses Act, which is due out in the next few months. Right now state money transmission licensing is a mess for internet companies such as bitcoin exchanges. In order to be compliant, companies need to navigate a patchwork of unique state-by-state licenses, an expensive and time consuming prospect. We’ve worked with the Uniform Law Commission’s to develop standardized money transmission licensing language that states can choose to adopt. This would give Bitcoin businesses much needed regulatory clarity and a simplified regulatory landscape, which in turn would make it easier to operate in those states.
Another solution to the state-by-state licensing patchwork problem has been proposed by the Office of the Comptroller of the Currency, the agency that charters banks in the United States. They have recognized that it is an onerous process for fintech companies to become fully licensed at the state level and believe that they can use their bank chartering authority to issue a special ‘fintech charter’ to qualifying companies, freeing them of the need for state licenses entirely. This is another solution that we have been advocating for, as it offers another simplified route to regulatory compliance for digital currency companies.
BLOCK TRIBUNE: What are the biggest challenges facing blockchain entrepreneurs?
AGRAWAL: As mentioned before, the cost of regulatory compliance will in many cases be prohibitive for small blockchain entrepreneurs. In our talks with business leaders from the space we’ve learned that many are already feeling the pressure from high compliance costs. Coin Center’s mission is to reduce that burden wherever possible by developing and advocating for sound and minimally invasive policy reactions to open blockchain technology.
