If You Build the Blockchain, Regulators Will Come
Op-ed by Ashley Baker published in RealClearFuture.
The hardest part of drafting any new regulation is establishing a definition. In fact, most of the policy work is in the definition and there are alarmingly few policy considerations after something is defined as a covered entity.
The definition of cryptocurrency has already proved problematic for regulators. Essentially, to commodities regulators, virtual currency is a commodity. For bank regulators, it is a bank. For securities regulators, it is a security. For those who regulate money transmitters, it is a money transmitter. For the purpose of property taxes, it is a property. Everyone wants a stake in the new world of virtual currency.
The “default setting” for regulators is to do something. This has lead to a lot of regulatory confusion surrounding cryptocurrency. For example, according to a 2015 Commodities Futures Trading Commission (CFTC) ruling, Bitcoin is a commodity. CFTC’s Director of Enforcement Aitan Goelman stated in a press release: