ETHERLive
ETHERLive delivers real-time price and volume data across 16+ exchanges to users in a clear and easy-to-understand package. Users can get up-to-the-second updates for each exchange/currency pair, as well as aggregated market averages for each exchange, currency, and the market as a whole. It also provides a global converted average of all the currency pairs monitored by ETHNews, converted to USD.

---

24hr ---
--%
Friday Apr 20th 2018
RESOURCES

The Basics

Learn the basics of Ethereum and various cryptocurrency technologies

Learn More

What is Ethereum?

Understand the underlying principles of the Ethereum Platform

Learn More

The Blockchain

Discover the revolutionizing technology known as the blockchain

Learn More
SUBMIT

Press Release

Submit a press release for consideration on ETHNews

Submit Press

Story / Dapp

Submit a story or DAPP to be considered for publication on ETHNews.

Submit Story

Explanation

Submit "Ethereum Explainer" content for consideration to be featured on ETHNews

Submit Topic
ETHNews Logo
---
--%
Home
News
Etherlive
Ether Price Analysis
Resources
Contact Us

GAO Assesses FinTech, DLT Landscape

By

Matthew

De Silva

WriterETHNews.com

On Thursday, the Government Accountability Office offered an in-depth examination of distributed ledger technology (DLT) and accompanying financial regulation. The GAO found that 1) DLT remains in its infancy and 2) inconsistent and complicated regulation may threaten to suffocate development.

On March 22, 2018, the US Government Accountability Office (GAO) published a 132-page report at the request of Congress entitled "Financial Technology: Additional Steps by Regulators Could Better Protect Consumers and Aid Regulatory Oversight."

The report included extensive commentary on blockchain and distributed ledger technologies, focusing heavily on issues of licensing and cybersecurity.

Licensing

"The complex U.S. financial regulatory structure can complicate fintech firms' ability to identify the laws with which they must comply and clarify the regulatory status of their activities," said the GAO. "As noted in our past reports, regulatory oversight is fragmented across multiple regulators at the federal level, and also involves regulatory bodies in the 50 states and other U.S. jurisdictions."

This is a familiar foe in the cryptocurrency world. In fact, to support virtual currency businesses, Coin Center strongly advocates for a federal licensing system for money transmitters rather than the state-by-state licensing that is currently standard. Unsurprisingly, the GAO learned through interviews that FinTech firms have been struggling to research and abide by labyrinthine licensing requirements that vary by state.

Without a doubt, uniform licensing standards could help tremendously. However, the GAO noted, there are potential advantages to having state regulators oversee money laundering concerns and similar matters. Essentially, state regulation might defray government costs (anything to reduce the deficit, right?).

What's terrible, though, is that smaller firms struggle to meet the costs of compliance research and licensing, which contributes to a regulatory environment more suited to dominant monopoly (but that's an issue that extends far beyond the blockchain ecosystem).

Unclear laws are an additional challenge. The GAO said, "In particular, understanding the laws and regulations that may apply to fintech firms was not easy because existing regulations were sometimes developed before the type of product or service they are now offering existed." With the sophisticated instruments and programs under development in the blockchain industry, firms don't always know what regulation might apply to them.

Unfortunately, this means that American companies are in danger of falling behind, and the United States risks the loss of forward-looking, risk-loving entrepreneurs. The report explained, "Fintech payments and DLT firms and other market participants told us that navigating this regulatory complexity can result in some firms delaying the launch of innovative products and services—or not launching them in the United States—because the FinTech firms are worried about regulatory interpretation."

Cybersecurity

The GAO also explored virtual currency and tokens, paying special attention to the activities of federal regulators like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The GAO provided a light summary of recent and significant actions by the regulators.

The office demonstrated special concern about the irreversibility of transactions, saying that virtual currencies could "pose some unique risks to consumers." The ostensible irreversibility of transactions (notwithstanding the DAO) also raises red flags and possible legal challenges, per the Federal Reserve.

The GAO report explained that DLT is "in the early stages of development," and noted that the Fed and the CFTC have cautioned that there are potential "cybersecurity and operational risks."

Still, the GAO wasn't all doom and gloom. Among other potential benefits, the report noted, "Innovations in payments, including the use of DLT, could reduce the cost of payments for consumers." The GAO also highlighted that "using DLT may greatly reduce settlement times for currency, derivatives, and securities transactions by improving processes or reducing the number of entities involved in a transaction."

Matthew De Silva

Matthew is a writer with a passion for emerging technology. Prior to joining ETHNews, he interned for the U.S. Securities and Exchange Commission as well as the OECD. He graduated cum laude from Georgetown University where he studied international economics. In his spare time, Matthew loves playing basketball and listening to podcasts. He currently lives in Los Angeles. Matthew is a full-time staff writer for ETHNews.

ETHNews is committed to its Editorial Policy

Like what you read? Follow us on Twitter @ETHNews_ to receive the latest GAO, Government Accountability Office or other Ethereum business and finance news.