Ronika Carter: Japan Crypto Industry “Is Giving People Hope”
Ronika Carter of Watson LLP in Orlando, Fla. is a regulatory attorney who believes licensing of cryptocurrency businesses and exchanges in the US is inevitable.
She talked with Block Tribune about what a national licensing program would look like and how Japan is a possible benchmark for implementing any domestic licensing.
BLOCK TRIBUNE: Who is calling for licensing of cryptocurrency and why would they do that?
RONIKA CARTER: Well, there are a number of players in the industry, but I think primarily in the US, it would be current bitCoin exchanges, and I think the issue is because the current regulatory and legal regime is such that it’s very difficult to navigate. These laws were not enacted with blockchain technology or distributed letter technology or cryptocurrencies in mind. So they’re finding it difficult to regulate the current state-by-state requirements, and all the time and money it takes to invest in learning how to properly govern and organize themselves.
BLOCK TRIBUNE: Basically, it’s the exchanges themselves calling on government to help them out by cutting through the red tape?
RONIKA CARTER: Correct. That’s my understanding. I think they just find it difficult to navigate, and from my understanding, believe that it would be beneficial to them to just have an easier landscape, so that they can invest more here in the US instead of the easier markets overseas.
BLOCK TRIBUNE: A lot of people claim that regulation often hampers growth, and blockchain and cryptocurrencies are growth industries. Do you believe that putting regulations on top of regulations here will be beneficial for the industry’s growth?
RONIKA CARTER: I think it will be beneficial to the industry’s growth because I think currently the lack of regulation it is prohibiting growth. I think there are more companies that would invest their time and resources and energy here in the US into developing their exchanges and the technology if we had a regulatory and a legal regime that provided them more guidance to how they should go about doing things.
BLOCK TRIBUNE: What will this look like? Will this be something that would go onto the Department of the Treasury? Or would it be under the SEC? How do you see it shaking out?
RONIKA CARTER: I think that’s a really good question, and that’s part of the debate. That’s as far as I heard about the discussions between different currency exchanges and the US of Office of the Comptroller of the Currency, and some have suggested that to go through that office, and offer special interest bank permits, or bank charges, if you will, for cryptocurrency exchanges. Others have suggested using the SEC, especially if you foresee cryptocurrency being used for exchange fund transfers. From my understanding, the reasons why the proposals, especially with reference to the SEC, had it been successful, are because of the lack of the legal, and the regulatory framework.
BLOCK TRIBUNE: Okay. Let’s presume that everyone agrees that this should go forward. Who’s going to pick up the cost for it? Will it be something that’s going to be borne in transactional fees? Or is it going to be something that the government will front the cost and will somehow be reimbursed?
RONIKA CARTER: I feel it would probably be a mixture of both. I think definitely transactional fees are going to be a major player. But I do think to some degree the government will have to bear some of the cost, at least in the initial laying- the-groundwork phase.
BLOCK TRIBUNE: Japan has been held up as kind of a role model for how to do this on a government level. What do you see as the benefits of what Japan is doing, and how applicable is it to our system over here?
RONIKA CARTER: I think what Japan is doing is it’s giving people hope, and it’s giving people a sense of confidence when investing in cryptocurrencies. I think the topic of cryptocurrencies and blockchain technology is really exciting, but it’s still a novel concept, and a lot of people don’t quite understand it. I think a lot of investors, especially those who are more risk-takers, have a hard time just trusting in the system and the technology when they don’t know enough about it. I think models like the Japanese model, for example, where they’re licensing cryptocurrency exchanges, are giving investors that sense of hope that this is safe, we’re not going to lose millions of dollars, and we can trust that this concept is reputable.
BLOCK TRIBUNE: There are rumblings out there that several nations, Russia among them, are thinking of starting their own cryptocurrency. What effect would that have on these sort of regulatory plans , and if we’re going to tackle the problem of regulation, would it make sense to start any sovereign cryptocurrency at the same time?
RONIKA CARTER: I don’t think it would hurt. I think in my opinion, just having the discussion about Russia and the US developing their own cryptocurrency helps to foster the progress, and I guess the energy that we need, to support developing our framework more for regulations and for the law. It wouldn’t hurt to have them develop at the same time, both the regulatory framework and the cryptocurrency. But, in my opinion, I think just laying the legal groundwork would be better because it helps us understand what we need to do in shaping our own cryptocurrency.
BLOCK TRIBUNE: There’s a debate going on as whether bitCoin and other cryptocurrencies will ever be used for transactional purposes versus stored value. Where do you come down in that argument?
RONIKA CARTER: I think if the laws and regulations develop the way that I believe that they should and the way that I foresee that they will in the future, then, yes, cryptocurrencies will be used for transactions. Unfortunately, there are a few issues with doing that right now. We briefly talked about before the lack of certainty around the technology. A lot of people just don’t know enough about it. I think there are also some legal implications that make it a little bit difficult to use transactions. In essence, with the way blockchain technology works, the record itself, the ledger itself is supposed to be immutable. It’s supposed to be difficult to corrupt because the ledger is distributed, and any amendments have to be verified by all members of the network and there’s encryption.
Ideally, it’s very difficult to corrupt, but there are concerns that it is corruptible. There are concerns that perhaps the ledger could be edited and people could be defrauded. There are legal implications for contracts, and data privacy issues, and security laws, and international laws, and principles of commenting. In essence, yes, I do think it will be used for transactions, but I do think we have a lot of red tape to clear before we can get to that point.
BLOCK TRIBUNE: There have been a number of prominent people in the financial community, and some in government. who have claimed bitCoin is a fraud and engaged in all sorts of name-calling. What effect does that have on moving forward towards a more formal recognition of cryptocurrency?
RONIKA CARTER: I don’t think the backlash and the criticism hinders our efforts to move forward. I think it just helps to foster the development of the discussion and the dialog that we need because, as I mentioned, a lot of people are still very skeptical because we just don’t know enough about the technologies. I think the criticism is a good thing, and I’m hoping it ultimately fosters that kind of conversation that we need to have with the industry leaders and those of us who are working to build the technology, and then, also, those who are skeptical, then we can sit down and ask the tough questions and develop the answers to think more broadly about current implications in things that we may face in the future.
BLOCK TRIBUNE: Do you believe that all of the cryptocurrency market can be reined-in under formal regulation? Or will there always be an outlaw element to it, considering it’s decentralized?
RONIKA CARTER: That’s a good question. I think within a particular territory, it’s possible to rein it in within the regulations. But I think because the technology is used internationally, there will always be an outlaw component. I don’t think it’s possible to rein all of it in, unless you’re just referring to one specific territory. I think there’ll always be an outlier.
BLOCK TRIBUNE: What effect on prices will even talking about regulation have? Some people have posited that it actually may hamper prices. What do you see?
RONIKA CARTER: I see the talks of regulation actually increase in the price of cryptocurrency over time. I mean. of course there’s always discussion and chatter that can yield somewhat inconsistent results in the marketplace. But I do think ultimately regulation is going to give investors that sense of security, and understanding that they need to place their money, and their trust into the system. Ultimately, I do think price is will increase.
BLOCK TRIBUNE: What’s your feeling on initial coin offerings? Pro, con?
RONIKA CARTER: I understand the backlash against them. I understand why regulators in China, and South Korea have essentially banned ICOs. In my opinion, I think a lot of the backlash just stems from a lack of understanding of the technology, and I do believe that the system, if it works the way it’s designed to work, it could be beneficial. I don’t oppose the use of ICOs, I just advocate for more education and more understanding.
