On Thursday, it was reported that the US Senate Banking Committee plans to host a hearing on bitcoin and cryptocurrency regulation next month. Commodity Futures and Trading Commission (CFTC) chairman J. Christopher Giancarlo and the Securities and Exchange Commission (SEC) chairman Jay Clayton will reportedly provide testimony sometime in February.
It appears that the hearing is being arranged in response to concerns from committee members.
On Tuesday, at a hearing entitled "Combating Money Laundering and Other Forms of Illicit Finance: Opportunities to Reform and Strengthen BSA [Bank Secrecy Act] Enforcement," Senator Mark Warner (D-VA) told panelists, "We are about to be overwhelmed with bitcoin, [and] other kinds of cryptocurrencies."
He asked, "How is the [financial] system preparing for this whole new movement?"
Greg Baer, president of the Clearing House Association, meekly offered, "I don't know how the system is preparing for cryptocurrencies."
"I'm not sure there is a way to prepare," he added, before deferring to his colleagues.
Heather Lowe, legal counsel and director of government affairs for Global Financial Integrity, responded more assertively.
"FATF [Financial Action Task Force on Money] has actually been looking at this quite closely," she said. "At the last two private sector meetings that I attended, there were breakout sessions specifically on [cryptocurrency] and how we regulate in this area."
"FINCEN [The Financial Crimes Enforcement Network] has done some regulation and we're the first country to actually have put some regulation with respect to cryptocurrencies, in one part of the transaction. And I think that's a good discussion to have with FINCEN, about how effective that's been."
In response, Senator Warner expressed hope that the committee could "get ahead of [cryptocurrency] rather than chasing it after the fact."
The first bitcoin futures contracts (offered by the CBOE) are due to settle on January 17, 2018, so the Banking Committee might have a better idea of the cryptocurrency landscape by the time of the hearing.
In December 2017, shortly after the CBOE and CME self-certified their bitcoin contracts, the CFTC released a statement on the matter, defending its due diligence. But, last week, Chairman Giancarlo announced that the CFTC Market Risk Advisory Committee will meet at the end of January to examine the self-certification process.
The CFTC came under fire for allowing bitcoin futures to come to market so quickly, with seemingly little public input. At the time, some even worried that cryptocurrency derivatives could impact conventional clearing systems.
Meanwhile, the SEC has quietly gone about its work, instituting a cease-and-desist order against Munchee and suspending trading of some companies that have questionably capitalized on the cryptocurrency mania. Yesterday, ETHNews reported on Kodak's somewhat specious intentions to pursue an ICO (token offering).