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Unexpected Highlights from the Senate Banking Committee Hearing on Cryptocurrencies

Even while US investors braced themselves for a cryptocurrency crackdown, the Senate Banking Committee Hearing on Cryptocurrencies produced a mix of emotions, from surprise to downright glee. The overall reaction from the cryptocurrency community was positive. Unpredictably, US government officials talked openly about the crypto space and how best to protect investors. Check out some of the more interesting highlights taken from the Senate Committee Hearing on February 6, 2018.

Senate Banking Committee Hearing on Cryptocurrencies and ICOs

Senators from the Banking Committee questioned SEC Chairman Jay Clayton as well as CFTC Chairman Christopher Giancarlo yesterday to discuss the cryptocurrency industry. Primarily the mood was upbeat as both Chairmen answered probing questions from the Senate Banking Committee. Some of the more compelling highlights of the Senate Banking Committee Hearing on Cryptocurrencies are encapsulated here:

1) The word ‘ban’ was only mentioned once, and erroneously, by Senator Kennedy, who referred to a complete ban on cryptocurrencies in South Korea. In fact, not only did we not hear the word ‘ban’, what we heard was that the committee wants to “Embrace Cryptocurrencies”. Surely, US investors were not expecting to hear this kind of language.

Senate Banking Committee Hearing on Cryptocurrencies

2) Sen. Warren made her usual friendly yet antagonistic appearance by debating the rule that ICOs were exempt from class action lawsuits. Clayton succinctly mentioned that class actions suits do not work when there is no money, and both appeared ready to discuss a workable solution. No one from the Senate Committee nor the Chairmen seemed aware of the escrow process that some ICOs have adopted to protect investors.

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3) Sen. Kennedy asked the poignant question:  “What’s the point of all this disclosure?” This followed his question to Chairman Giancarlo about whether he had read the prospectus the last time he purchased a bond or index fund. Of course the answer was, “No” so indeed requiring ICOs to disclose does not seem the best avenue for protecting investors.

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4) Sen. Warner seemed to be more informed about blockchain technology and the potential of cryptocurrencies. But when he mentioned Ethereum, the platform upon which most ICOs build their token, Chairman Giancarlo seemed unaware.

5) In general, there was ample talk of disruptive technologies, countered by pleas from one Senator for the government to fund the MGTI Act to modernize governmental IT systems. Suggestions to leave behind legacy systems and move to the cloud were met by a solemn acknowledgment of the problem of being behind in technology.

6) In an interesting twist, Chairman Clayton, when probed about informing the public about the risks of investing in cryptocurrencies, did not mention social media. Instead, he outlined a plan to educate librarians, citing that the number one searched for item in library computers was, “Bitcoin.”

7) An interesting quote from Chairman Clayton, “…there are disruptive technologies that come along but they should not disrupt the way you look at markets – for us  – or the way you look at investors.” I think maybe some of us may beg to differ on that point 🙂

The Major Takeaway from the Senate Banking Committee Hearing on Cryptocurrencies and ICOs

All in all, the Senate Banking Committee Hearing on Cryptocurrencies and ICOs gave hope to investors and may have even started a wave of confidence, as ever since the meeting, BTC has started to rise again.

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