Brian Brooks, CEO of Bitfury and former acting director of the U.S. Office of the Comptroller of the Currency, hinted that the U.S. regulatory environment could force many crypto firms to leave the country and has already stymied companies trying to offer a variety of financial products.
During a hearing on Wednesday with the House Financial Services Committee discussing digital assets and the future of finance, U.S. Congressman Ted Budd said he was concerned that current U.S. enforcement regulations could “force the next generation of financial technology to be born outside our borders.” Brooks spoke on behalf of Bitfury when said:
“Some products that are legal in other countries just aren’t legal in the U.S. One of the things that makes cryptocurrencies risky is that consumers may not understand the difference between one coin and another, so they may Want to diversify...in the US we don't allow it, but we allow it in Canada, Germany, Singapore, Portugal and a few other places," he added:
"If you're an (exchange-traded fund) developer, there's no blurred line, it's very clear: you can't develop here, so you have to go abroad."
Bitfury CEO Brian Brooks speaks before the House Financial Services Committee on Wednesday
Brooks blames the U.S. Securities and Exchange Commission (SEC) for the lack of exchange-traded funds (ETFs) in the U.S. While the regulator recently approved ETFs in which investment managers ProShares and Valkyrie hold exposure to bitcoin futures, it has yet to give the green light to BTC or other crypto ETFs. In contrast, many U.S. companies operating in Canada have successfully applied to local regulators for ETFs that hold direct exposure to cryptocurrencies.
However, the lack of approvals for cryptocurrency investment products is more a result of the “fragmented approach to regulation” in the U.S. due to the sheer number of agencies overseeing banking, finance and digital assets, the former OCC head said. Brooks proposes a solution whereby traditional financial institutions treat cryptocurrencies in much the same way.
Brooks said: “When I hear people say we need a cryptocurrency regulator, I would say we should have one regulator for banks first, but we have three. Add another regulator to a system of regulators."
“If I’m a crypto lending platform, I probably should be regulated by the FDIC. If I’m a crypto trading platform, I should probably be regulated by the CFTC and the SEC, but we treat crypto a certain way differently than anything else, Because it's new. I think cryptocurrency is just a step in improving the functionality of the system."
As of this writing, the CEOs of Circle, FTX, Bitfury, Paxos, Stellar Development Foundation, and Coinbase Inc. are taking questions from U.S. lawmakers about the state of digital assets in the country. Cointelegraph reported earlier on Wednesday that House representatives expressed concerns about token projects that exercise centralized control over many user assets.
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