State or Fed? That is the question. Three cryptocurrency experts debated the why’s and why not’s on the subject of leaving crypto legislation to either the US federal government or giving the final authority to the individual states.
The three experts Peter Van Valkenburgh, Gary Gensler, and Caitlin Long debated the topic as part of a panel discussion at the Massachusetts Institute of Technology’s (MIT) Business of Blockchain event on May 2.
Caitlin Long, Wyoming’s Blockchain Coalition president was all for giving states the right to legislate as they already have control over laws such as property and commercial law, whereas securities law fell under federal government control from Washington. This was not agreeable to Peter Van Valkenburgh, director of research at Coin Center who felt that some states both under and over-regulate, citing Alabama as a current example. He argued:
“You can get a money transmission license in the state of Alabama […] for a USD 5,000 bond. So a company that’s handling potentially millions of dollars for Alabamans is secured, the custodial risk is hedged against a USD 5,000 bond.”
Wyoming itself has a notable progressive attitude towards cryptocurrency, and earlier this year threw even more weight behind the existence of cryptocurrency by allowing the class of asset to be treated as financial assets under the existing law. Long praised the state for its legal clarification of these terms as applied to cryptocurrency.
Like Van Valkenburg, Gensler, former chairman of the Commodity Futures Trading Commission and current MIT lecturer, was is the Fed camp when it came to down to who had the last word on regulation; more specifically about cryptocurrency exchanges, suggesting:
“One, I think that we do need the investor protection at the crypto exchanges; and two, on the money-laundering side, right now the crypto exchanges are required to register at any state they’re transmitting over some de minimis amount and that means in 50-plus jurisdictions.”
A bill designed to exclude cryptocurrencies being defined as securities has already been reintroduced for consideration by representatives in the United States House of Representatives; a bill that would override state control of cryptocurrencies.
Warren Davidson (R) and Darren Soto (D) representatives in the United States House of Representatives, introduced the bill, the Token Taxonomy Act last December in an attempt to amend the Securities Act of 1933 and the Securities Act of 1934 to exclude cryptocurrencies. The act contains a preemption provision that would supersede state regulations.
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