future government regulation of cryptocurrency
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"6.6 billion dollars raised in coin offerings"
!time:23:55 "6.6 billion dollars raised in coin offerings"
23:55 7s
03/14/18
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according to MIT study 270 to 317 million "likely gone to fraud or scams".
!time:24:57 according to MIT study 270 to 317 million "likely gone to fraud or scams".
24:57 7s
03/14/18
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SEC has authority to bring enforcement action violation of federal securities laws
!time:25:17 SEC has authority to bring enforcement action violation of federal securities laws
25:17 7s
03/14/18
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"online trading platforms may also be violating federal securities laws" according to sec. must register with sec.
!time:26:12 "online trading platforms may also be violating federal securities laws" according to sec. must register with sec.
26:12 7s
03/14/18
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purpose of the hearing: examing opportunities for business and investors and review adherence to applicable laws, consider regulatory approach and how to achieve clarity going forward.
!time:26:27 purpose of the hearing: examing opportunities for business and investors and review adherence to applicable laws, consider regulatory approach and how to achieve clarity going forward.
26:27 7s
03/14/18
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Congressman Brad Sherman: "Cryptocurrencies are a crock. What social benefit do provide? They allow a few dozen men in my district to sit in their pajamas and all day and tell their wives they're gonna be millionaires. They help terrorists and criminals move money around the world. They help tax evaders. They help startup companies commit fraud..."
!time:30:52 Congressman Brad Sherman: "Cryptocurrencies are a crock. What social benefit do provide? They allow a few dozen men in my district to sit in their pajamas and all day and tell their wives they're gonna be millionaires. They help terrorists and criminals move money around the world. They help tax evaders. They help startup companies commit fraud..."
30:52 7s
03/14/18
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undercuts government's ability to issue world reserve currency which prevents us from issuing economic sanctions.
!time:31:33 undercuts government's ability to issue world reserve currency which prevents us from issuing economic sanctions.
31:33 7s
03/14/18
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investment in bitcoin is not investment in the real economy (like a new factory), just gambling.
!time:3:57 investment in bitcoin is not investment in the real economy (like a new factory), just gambling.
3:57 7s
03/14/18
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coinbase trains "more law enforcement agencies than anybody"
!time:36:00 coinbase trains "more law enforcement agencies than anybody"
36:00 7s
03/14/18
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there are over 1400 currencies available but coinbase only allows spot trading in 4 (bitcoin, ethereum, litecoin, bitcoin cash) because they are deemed virtual currencies by regulators and not securities.
!time:36:25 there are over 1400 currencies available but coinbase only allows spot trading in 4 (bitcoin, ethereum, litecoin, bitcoin cash) because they are deemed virtual currencies by regulators and not securities.
36:25 7s
03/14/18
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Lempres (Coinbase): ICOs are inevitable. Will allow entrepreneurs anywhere in the US to access sources of capital without knowing funders in New York or Silicon Valley.
!time:36:58 Lempres (Coinbase): ICOs are inevitable. Will allow entrepreneurs anywhere in the US to access sources of capital without knowing funders in New York or Silicon Valley.
36:58 7s
03/14/18
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Lempres(Coinbase): No need for new regulator. Four existing regulators suffice (SEC, CFTC, FinCen, Federal Trade Commission).
!time:37:46 Lempres(Coinbase): No need for new regulator. Four existing regulators suffice (SEC, CFTC, FinCen, Federal Trade Commission).
37:46 7s
03/14/18
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Brummer: one study has noted that "in 32% of ICOs it is not possible to identify the issuer's identity or promoter's origin." No way to know investor protections afforded, or to know the public authority to contact in the case of fraud.
!time:41:48 Brummer: one study has noted that "in 32% of ICOs it is not possible to identify the issuer's identity or promoter's origin." No way to know investor protections afforded, or to know the public authority to contact in the case of fraud.
41:48 7s
03/14/18
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Brummer: ICOs need to provide plain english and technical language describing proposed technology. Code needs to be publicly available and vetted by third party. Forward looking statement need to be based in fact.
!time:41:48 Brummer: ICOs need to provide plain english and technical language describing proposed technology. Code needs to be publicly available and vetted by third party. Forward looking statement need to be based in fact.
41:48 7s
03/14/18
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Brummer: legal rights endowed by token ownership need to be disclosed as well as how blockchain governance will work.
!time:44:25 Brummer: legal rights endowed by token ownership need to be disclosed as well as how blockchain governance will work.
44:25 7s
03/14/18
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Rosenblum: "Cryptocurrency is a bit of a misnomer." Some are currencies, but a number of tokens have a very specific purpose on very specific platforms "designed to do very special things".
!time:48:55 Rosenblum: "Cryptocurrency is a bit of a misnomer." Some are currencies, but a number of tokens have a very specific purpose on very specific platforms "designed to do very special things".
48:55 7s
03/14/18
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Valkenburgh: "the fundamental innovation of bitcoin is digital scarcity".
!time:50:22 Valkenburgh: "the fundamental innovation of bitcoin is digital scarcity".
50:22 7s
03/14/18
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Valkenburgh: blockchains are just records that are maintained and validated by thousands of participants rather than a handful of corporations making them more secure.
!time:52:08 Valkenburgh: blockchains are just records that are maintained and validated by thousands of participants rather than a handful of corporations making them more secure.
52:08 7s
03/14/18
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Rosenblum: everything is moving extremely rapidly. an example is AI being combined with blockchain technology. Hard to know now what kind of additional regulatory power will be needed.
!time:58:58 Rosenblum: everything is moving extremely rapidly. an example is AI being combined with blockchain technology. Hard to know now what kind of additional regulatory power will be needed.
58:58 7s
03/14/18
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Lempres (Coinbase): "we are waiting for the dust to settle between the sec and cftc before supporting ICOs. There's tremendous potential, we want to be able to support it. There is an important distinction between what is a security and what is a commodity. They deserve to be treated differently."
!time:1:01:02 Lempres (Coinbase): "we are waiting for the dust to settle between the sec and cftc before supporting ICOs. There's tremendous potential, we want to be able to support it. There is an important distinction between what is a security and what is a commodity. They deserve to be treated differently."
1:01:02 7s
03/14/18
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Congressman Scott: both SEC chairman clayton and CFTC chairmanGiancarlo "have told me that neither one of them has regulatory authority"; they have to rely on states using money transmitter designation. "There's a regulatory shortfall. See my point?"
Congressman Scott: both SEC chairman clayton and CFTC chairman !time:1:02:20 Giancarlo "have told me that neither one of them has regulatory authority"; they have to rely on states using money transmitter designation. "There's a regulatory shortfall. See my point?"
1:02:20 7s
03/14/18
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Lempres (Coinbase): "There are sufficient authorities in place" if you treat cryptocurrencies as commodities which are currently regulated federally.
!time:1:03:24 Lempres (Coinbase): "There are sufficient authorities in place" if you treat cryptocurrencies as commodities which are currently regulated federally.
1:03:24 7s
03/14/18
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Rosenblum: regulation of ICOs by enforcement "in an area as complicated, as dynamic as this" is not the appropriate way to regulate. Need clear guidelines on how existing rules apply.
!time:1:07:02 Rosenblum: regulation of ICOs by enforcement "in an area as complicated, as dynamic as this" is not the appropriate way to regulate. Need clear guidelines on how existing rules apply.
1:07:02 7s
03/14/18
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Lempres (Coinbase): our cyber security is state of the art. 99% of assets held offline in cold storage. The amount held in the hot wallet is fully insured.
!time:1:08:40 Lempres (Coinbase): our cyber security is state of the art. 99% of assets held offline in cold storage. The amount held in the hot wallet is fully insured.
1:08:40 7s
03/14/18
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Lempres (Coinbase): we knew the SEC viewed Bitcoin, Ethereum, and Litecoin as currencies because they said so in the DAO report. Bitcoin Cash as well since it is a Bitcoin derivative.
!time:1:12:05 Lempres (Coinbase): we knew the SEC viewed Bitcoin, Ethereum, and Litecoin as currencies because they said so in the DAO report. Bitcoin Cash as well since it is a Bitcoin derivative.
1:12:05 7s
03/14/18
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Valkenbugh: Crypto looks like the dotcom bubble in the 90's. Mainstream investors need to understand that everyone is speculating whether their crypto investment will be the pets.com or the amazon.com of the crypto space.
!time:1:17:05 Valkenbugh: Crypto looks like the dotcom bubble in the 90's. Mainstream investors need to understand that everyone is speculating whether their crypto investment will be the pets.com or the amazon.com of the crypto space.
1:17:05 7s
03/14/18
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Valkenburgh: applying the Howie test to crypto, a token is a security when there is the expectation of profits from the efforts of an issuer who we rely on to deliver something of economic value.
!time:1:21:52 Valkenburgh: applying the Howie test to crypto, a token is a security when there is the expectation of profits from the efforts of an issuer who we rely on to deliver something of economic value.
1:21:52 7s
03/14/18
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Lempres (Coinbase): blockchain tech gives you more insight into bad actors than any other financial instrument. Coinbase uses both internal developed and commercially available blockchain analytics tools to link "bad nodes" to others with whom they've interacted. "Nearly 20% of our employees dedicated to compliance."
!time:1:26:20 Lempres (Coinbase): blockchain tech gives you more insight into bad actors than any other financial instrument. Coinbase uses both internal developed and commercially available blockchain analytics tools to link "bad nodes" to others with whom they've interacted. "Nearly 20% of our employees dedicated to compliance."
1:26:20 7s
03/14/18
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Congresswoman Maloney: concerned that "average people" are using cryptocurrencies as investment tool rather than currency and will lose money when "bubble eventually bursts". Working on a bill to provide investor protections for cryptocurrencies"that have the characteristics of an investment... like we have for stocks and bonds... including disclosures, that will be regulated by the SEC."
!time:1:27:20 Congresswoman Maloney: concerned that "average people" are using cryptocurrencies as investment tool rather than currency and will lose money when "bubble eventually bursts". Working on a bill to provide investor protections for cryptocurrencies"that have the characteristics of an investment... like we have for stocks and bonds... including disclosures, that will be regulated by the SEC."
1:27:20 7s
03/14/18
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Congressman Emmer: "I have a problem with 'government is here to help us' and we need more government... I tend to believe people are in these things for good. That they're trying to improve their own lives and hopefully the lives of people around them... A rising tide lifts all boats."
!time:1:31:10 Congressman Emmer: "I have a problem with 'government is here to help us' and we need more government... I tend to believe people are in these things for good. That they're trying to improve their own lives and hopefully the lives of people around them... A rising tide lifts all boats."
1:31:10 7s
03/14/18
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Congressman Emmer: "I hear elected officials who don't have any concept of what we're dealing with and how exciting it is talking about we gotta run in, we gotta regulate, we gotta create more government infrastructure. I respectfully disagree that that won't act as a wet blanket on this amazing new technology... Milton Friedman predicted this back in 1999..."
!time:1:31:38 Congressman Emmer: "I hear elected officials who don't have any concept of what we're dealing with and how exciting it is talking about we gotta run in, we gotta regulate, we gotta create more government infrastructure. I respectfully disagree that that won't act as a wet blanket on this amazing new technology... Milton Friedman predicted this back in 1999..."
1:31:38 7s
03/14/18
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Congressman Emmer: "To say that you have 20% of your workforce is working on compliance is nothing to be celebrating."
!time:1:33:56 Congressman Emmer: "To say that you have 20% of your workforce is working on compliance is nothing to be celebrating."
1:33:56 7s
03/14/18
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Lempres (Coinbase): "What we need more than any particular approach is to know what that approach is going to be from the government. So we can plan and we can move."
!time:1:34:17 Lempres (Coinbase): "What we need more than any particular approach is to know what that approach is going to be from the government. So we can plan and we can move."
1:34:17 7s
03/14/18
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Congressman Emmer: "Right now this system gives advantage to the individual, and not to the government, and I'm worried about giving advantage to the government and taking away liberty from the individual. Hopefully we'll be able to meet that balance as we go forward."
!time:1:35:35 Congressman Emmer: "Right now this system gives advantage to the individual, and not to the government, and I'm worried about giving advantage to the government and taking away liberty from the individual. Hopefully we'll be able to meet that balance as we go forward."
1:35:35 7s
03/14/18
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Congressman Foster: "Much of our daily lives will involve something like blockchain, so I think it's past time for governments have a look at these digital tokens and figure out how they should be used."
!time:1:36:50 Congressman Foster: "Much of our daily lives will involve something like blockchain, so I think it's past time for governments have a look at these digital tokens and figure out how they should be used."
1:36:50 7s
03/14/18
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Congressman Foster: the three things regulators need are busting trades, electronic audit trail and authentication of participants.
!time:1:38:42 Congressman Foster: the three things regulators need are busting trades, electronic audit trail and authentication of participants.
1:38:42 7s
03/14/18
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Rosenblum: making a distinction between what is and isn't a security in the cryptocurrency space would "lead the market to distraction." It's difficult to draw a line for when you are no longer relying on the efforts of promoters (using the Howie test), even when a promise for tokens converts to actual tokens operating on a working blockchain. "Don't even bother. Come up with a simple, easy system to use that's gonna apply to all of these things regardless of whether they're a security."
!time:1:47:35 Rosenblum: making a distinction between what is and isn't a security in the cryptocurrency space would "lead the market to distraction." It's difficult to draw a line for when you are no longer relying on the efforts of promoters (using the Howie test), even when a promise for tokens converts to actual tokens operating on a working blockchain. "Don't even bother. Come up with a simple, easy system to use that's gonna apply to all of these things regardless of whether they're a security."
1:47:35 7s
03/14/18
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Lempres (Coinbase): 40 money transmission licenses in 38 states.
!time:1:50:45 Lempres (Coinbase): 40 money transmission licenses in 38 states.
1:50:45 7s
03/14/18
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Lempres (Coinbase): file SARS with FinCen including blockchain analytics data so that "if an investigation is warranted, to provide broader context".
!time:1:51:36 Lempres (Coinbase): file SARS with FinCen including blockchain analytics data so that "if an investigation is warranted, to provide broader context".
1:51:36 7s
03/14/18
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Lempres (Coinbase): Global Intelligence Unit trains "more law enforcement agencies globally than anyone... hundreds of state and local agencies... how the blockchain works, how cryptocurrencies work, what information is there and how to put a case together if they need to put a case together."
!time:1:52:22 Lempres (Coinbase): Global Intelligence Unit trains "more law enforcement agencies globally than anyone... hundreds of state and local agencies... how the blockchain works, how cryptocurrencies work, what information is there and how to put a case together if they need to put a case together."
1:52:22 7s
03/14/18
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Congressman Sherman: "The question is, is there some great social purpose that cannot be met in any other way [besides cryptocurrency]."
!time:1:59:21 Congressman Sherman: "The question is, is there some great social purpose that cannot be met in any other way [besides cryptocurrency]."
1:59:21 7s
03/14/18
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Chairman Huizenga: "It seems to me the only way there's going to be an ultimate legitimization of cryptocurrencies is if a central bank somehow recognizes it."
!time:2:05:45 Chairman Huizenga: "It seems to me the only way there's going to be an ultimate legitimization of cryptocurrencies is if a central bank somehow recognizes it."
2:05:45 7s
03/14/18
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Valkenburgh: Chairman Clayton of SEC recognizes distinction between tokens as securities and "pure cryptocurrencies" which should be regulated by Chairman Giancarlo of the CFTC which has the power to police commodity spot markets "ex-post". If a gap exists in federal regulatory authority it may be in the supervision of markets "ex-ante" to set security and transparency standards, now enforced by a patchwork of state money transmission regulations. It may be useful to federalize these.
!time:2:10:52 Valkenburgh: Chairman Clayton of SEC recognizes distinction between tokens as securities and "pure cryptocurrencies" which should be regulated by Chairman Giancarlo of the CFTC which has the power to police commodity spot markets "ex-post". If a gap exists in federal regulatory authority it may be in the supervision of markets "ex-ante" to set security and transparency standards, now enforced by a patchwork of state money transmission regulations. It may be useful to federalize these.
2:10:52 7s
03/15/18
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Valkenburgh: current regulation is "anarchic" both in terms of inconsistency between SEC and CFTC and federal vs state licensing. State by state money transmission licensing is the biggest impediment to the cryptocurrency space because of "redundant and non-productive costs that it imposes on the industry" and ineffective investor protections. Needs to be pre-empted by a federal regime.
!time:2:20:40 Valkenburgh: current regulation is "anarchic" both in terms of inconsistency between SEC and CFTC and federal vs state licensing. State by state money transmission licensing is the biggest impediment to the cryptocurrency space because of "redundant and non-productive costs that it imposes on the industry" and ineffective investor protections. Needs to be pre-empted by a federal regime.
2:20:40 7s
03/15/18
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Valkenburgh: Chairman Giancarlo of CFTC argued for data reporting, capital requirements, cyber security standards, measure to prevent fraud and price manipulation, anti-money laundering and know your customer protections as requirements for intermediaries in the cryptocurrency space.
!time:2:21:45 Valkenburgh: Chairman Giancarlo of CFTC argued for data reporting, capital requirements, cyber security standards, measure to prevent fraud and price manipulation, anti-money laundering and know your customer protections as requirements for intermediaries in the cryptocurrency space.
2:21:45 7s
03/15/18
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Valkenburgh: from a regulatory standpoint a distinction must be made between, on one hand, scarce tokens existing on a blockchain used for payment or computing services, and on the other hand, promises for future tokens once some future tech is built.
!time:1:44:05 Valkenburgh: from a regulatory standpoint a distinction must be made between, on one hand, scarce tokens existing on a blockchain used for payment or computing services, and on the other hand, promises for future tokens once some future tech is built.
1:44:05 7s
03/22/18
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Valkenburgh: Bitcoin is a commodity bc it is a scarce digital asset analogous to gold. Ethereum is a commodity because it powers a computing platform analogous to oil powering industry. Filecoin is a commodity like real estate "measured in gigabytes instead of square feet".
!time:1:22:59 Valkenburgh: Bitcoin is a commodity bc it is a scarce digital asset analogous to gold. Ethereum is a commodity because it powers a computing platform analogous to oil powering industry. Filecoin is a commodity like real estate "measured in gigabytes instead of square feet".
1:22:59 7s
03/25/18