Cryptocurrency exchange Coinbase said in a blogpost that the Congress need not create a new regulator or regulatory scheme for digital currency as the spot markets can be effectively regulated under current law.
The blog also carried Coinbase's written testimony to the House Committee on Financial Services, Subcommittee on Capital Markets, Securities, and Investment.
Coinbase has been called upon by the Congress to testify several times over the years as an advocate for digital currency's ability to create a more efficient, fair and open financial system for all.
"It has tremendous potential. To fulfill that potential, we believe that responsible regulation is required. At the same time, we want to help ensure that the technology's incredible benefits are not inadvertently stifled by regulatory or legal missteps," said Mike Lempres, chief legal and risk officer at Coinbase.
"Although regulatory coverage is deep and broad, it is not clear where one regulator's authority ends and transitions to another. This leads to a lack of clarity for companies who must make decisions prospectively about which regime applies at what time to each asset," said Lempres .
The inconsistent tax treatment that hinders the development of this new asset class shows the lack of coordination. The SEC and CFTC should clearly determine whether a token should be treated as a commodity or a security for compliance purposes, he said.
Congress should insist that the SEC and CFTC coordinate, as they have in the past, to clarify how companies, markets and investors can determine whether an individual token is a security or a commodity.
Lempres noted that providing a clear regulatory framework by the current regulators will create benefits for both U.S. investors and entrepreneurs. However, he warned, "If the U.S. does not provide a clear, thoughtful regulatory environment, the investment can move very quickly to other countries."
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