On Thursday, June 23, Charles Hoskinson, co-founder and CEO of IO Global (aka “IOG”, formerly known as “IOHK”), the company responsible for research and development of Cardano, spoke about “the ‘Importance of & Responsible Regulation’ for the Crypto Industry.
His comments came as he testified and answered questions from members of the U.S. House Subcommittee on Commodity Trade, Energy and Credit.
According to the transcript of that testimony, which was published in an IOG blog post on June 23, Hoskinson had this to say about crypto regulation:
“I0G, myself and many others in the industry support and require proper and responsible regulation of digital assets and blockchain technology. However, it is a new technology and a radically new asset class that cannot easily adapt to the limitations of laws and tests created almost a century ago.
“Cryptocurrencies are financial stem cells, programmable software that can be almost any asset and can change over time. In fact, no two cryptocurrencies are the same and the uses, functions, and characteristics of cryptocurrencies can vary depending on who holds the cryptocurrency, why, and where. Cryptocurrency can be used to verify data, transfer information or value, purchase goods, provide access to services, serve as a rewards or membership program, serve as a store of value or as an investment , all at the same time or at different times. cryptocurrency life.
“The United States legislature has never tried to regulate something that could be so many different things at the same time. Yes, some cryptocurrencies can be securities, some can be commodities, some can be both, but many may not be either. Regardless of how a cryptocurrency is labeled, three things should be kept in mind: (i) existing US regulatory regimes have never retained such an asset, (ii) without cryptocurrencies, most blockchain technologies simply will not work and (iii) any regulatory objective should be to promote appropriate consumer protection and ensure market integrity. The latter can be achieved through regulatory approaches that do not necessarily require labeling a cryptocurrency as a security or a commodity.
“U.S. securities laws provide investor and market protection based on the assumption that there is and always will be a centralized entity (e.g., a company that is identifiable and can permanently assume the role of providing financial and other data to the holders of its shares). Some blockchain technologies, and therefore cryptocurrencies, may initially be created or supported by a somewhat loosely centralized entity similar to a corporation, but often this is not the case and over time also all crypto- currencies and blockchains that exist without any centralized entity that can be identified as the party supporting such technology. Existing laws and regulations that assume the existence of such centralized and accountable parties simply and logically cannot work in the case of blockchain technology and the cryptocurrencies that drive these technologies.
“Responsible regulation should begin with an understanding of the critical role blockchain technologies can play in ensuring American competitiveness, America’s security, especially digital infrastructure, Americans’ financial inclusion, and fostering development. and economic growth.“
On June 19, Hoskinson spoke about the FinTech company’s legal battle with the United States Securities and Exchange Commission (SEC), which argues that XRP is an unregistered security.
As you may recall, on December 22, 2020, the SEC announced that it had “intended action against Ripple Labs Inc. and two of its executives, who are also significant security holders, alleging that they had raised over $1.3 billion through an unregistered and ongoing program. offering of securities of digital assets. Essentially, the SEC argues that XRP is a security under US federal securities laws.
The CEO of IOG spoke about this lawsuit during an interview with crypto influencer Ben Armstrong (who goes by the name “BitBoy Crypto” on social media platforms).
According to a Daily Hodl report, Hoskinson said:
“This is just one example of what happens when you regulate by application rather than legislation… You should have clear and understandable standards. And there should be a clear process for people to adhere to and comply with those standards. For example, with the public sale of Ethereum in Switzerland, we just asked the Swiss government, and after a few weeks of haggling, they told us what to do, and we had a thing, and that’s it.
“The SEC tends not to issue no-action letters in a meaningful way for the industry. So there’s not really a good way to interface and integrate, and in the absence of that, people have different opinions, and there are winners and losers, and sometimes people get confused. come out with crazy stuff.“