- Bitcoin and other digital assets have fallen into a regulatory grey area
- The regulations that many fear will disrupt the current digital asset landscape are not actually all that difficult or unreasonable, according to Bryan Bishop, co-founder and CTO of Avanti Financial Group
Bitcoin 2021, Miami — While regulatory crackdowns on crypto may sound like nails on a chalkboard to some investors, experts insist that regulation is essential to advancing the asset class.
“The hardest problem in this space is figuring out how to wrap the crypto rails that we have created with a regulatory map,” said Bryan Bishop, co-founder and CTO of Avanti Financial Group, during a panel discussion at the Bitcoin 2021 conference in Miami. “How do we start running everyday transactions in the crypto as part of the formally regulated banking and financial system? That is not a solved problem at all.”
However, the regulations that many fear will disrupt the current digital asset landscape are not actually all that difficult or unreasonable, Bishop said.
“In my experience, regulation is actually not as hard to deal with as people seem to think,” he said “The folks who are overseeing regulated entities generally want you to be doing a number of totally reasonable things, like maintaining a long and thorough business continuity plan, which you probably should be doing anyway.”
Bitcoin and other digital assets have fallen into a regulatory grey area. With several different governing bodies, there is often confusion about which organization tackles which issue.
“A lot of folks think that the SEC is the regulator for crypto, but actually there are multiple different regulators in the US,” said Zach Dexter, CEO of LedgerX, during the panel. “The SEC generally handles the security side, and the CFTC generally handles the commodity derivative side — and bitcoin and ethereum are considered commodities.”
Regulations that may have seemed unheard of a few years ago are starting to become a reality. In May, the Treasury Department announced that any cryptocurrency transfer over $10,000 must be reported to the IRS. Securities and Exchange Commission Chairman Gary Gensler put “bad crypto actors” on notice with a warning that regulations will start ramping up.
“Entering the space, you have to be prepared to operate within certain constraints,” Bishop said. “One of the first questions to ask is where are you actually going to operate, and who is going to be the regulator? Right now, for example, Wyoming has seemed more prepared on this front.”
The regulations though are all signs that the landscape is maturing, and ramped-up rules are going to be inevitable, Bishop said.
“There used to be a question about whether these companies could be regulated,” said Bishop. “Now, people are saying ‘of course it can be regulated,’ but that wasn’t always so obvious. It’s becoming quite clear that if the point is to continue to grow, it will be hard without that structure.”
Read more of our coverage from Bitcoin 2021 here.