Bitcoin Companies to Support CFTC, Withdraw Proposal to Regulate Digital Assets

By Nikki Dowling Fox News Channel

Three leading cryptocurrency executives will give in person their support for the efforts to save the Commodity Futures Trading Commission, which some say is in jeopardy because of its role in regulating crypto-assets.

Paul Matyas, a professor of systems finance at Cambridge University; David Cohen, former head of cryptocurrency at Goldman Sachs and Evan Borofsky, the CEO of Treasurycoin, will testify at a hearing before the House Financial Services Committee on Tuesday.

The hearing comes after the CFTC in November found flaws in the underlying “chains” (key parts of the crypto-value chains) that support the top virtual currency, Bitcoin. But the CFTC, which had said in January that it was taking on non-digital tokens from the crypto-market, withdrew a proposed rule on Monday that would have further increased regulatory oversight of crypto-assets.

The proposed rule would have put “blockchain-based cryptocurrency custody and exchange services under the CFTC’s jurisdiction,” as well as “explicitly adopt relevant oversight mandates for the first time,” the agency said in a blog post.

Cohen said during the hearing that the panel “need to continue to invest in the technology and work with the rest of the regulatory system to make sure the industry is able to get the support it needs and the access it needs.”

In a post on the Bitcoin Foundation’s blog, Cohen said there is “more to do to protect assets on blockchain, protect the investors, and keep the crypto community safe.”

Lawmakers will get a firsthand look at one of the most complex ways to invest in the space, in which over 1,600 companies now operate. The European Union has set rules that require certification and state-of-the-art infrastructure before the crypto-market can be included in some European financial products.

As part of the hearing, the House Financial Services Committee is also taking questions on technical issues surrounding Bitcoin.

Notably, little is known about Treasurycoin, which is valued around $165 million. Commerce Secretary Wilbur Ross told Congress last October the government has taken an interest in the firm’s workings, which made its initial public offering of “Treasury Coins” in December.

Cohen said in a Twitter post in November that the private company is a “tech-firm committed to helping start-ups and their investors generate and leverage ‘the bounty of bitcoin’.” Treasurycoin has been valued at $160 million but has yet to issue any of its own currency.

Asked if Treasurycoin could have political implications, Cohen said “no,” adding that he would not be “totally surprised” if the firm ran into political influence.

The hearing is an important one for lawmakers as they are out of Washington during the week and have no live TV broadcasts in the House. Fox News partners with the Institute of Justice and has helped get the hearing put together.

Topics that will be covered will include “blockchain and cryptocurrency, how they affect exchanges, crypto-currencies, virtual currencies, and any other blockchain innovations, the role of the CFTC in the U.S. regulatory environment, and what Congress needs to do to protect Bitcoin,” as well as “how to implement fintech.”

The hearing begins at 10 a.m. Tuesday.

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Nikki Dowling is a Fox News Business correspondent based in Washington, D.C. She covers business and technology. Follow her on Twitter @NikkiDowling and read more of her stories at https://cnbc.com/andrewschneider/.

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