Blockchain tech a ‘promising innovation’ for financial firms: U.S. Treasury
The U.S. Treasury Department is of the opinion that blockchain or distributed ledger technology is among certain “promising innovations” that could be used by financial companies. The statement was made in a report released on Tuesday, addressed to President Donald Trump, on emerging trends in the financial industry – including cryptocurrency.
Though the report mentioned cryptocurrency only in passing, it encourages regulators to explore this space and work on building a framework for these technologies to operate.
It pointed out that financial authorities around the world have increasingly addressed cryptocurrencies. The recent G20 summit, where digital assets were discussed explicitly for the first time, has tasked the Financial Stability Board (FSB) with studying virtual currencies and the risks they pose to the financial system.
The report cautioned that financial innovations, including blockchain technology, requires time to mature because of which regulatory treatment may be uncertain. “From the perspective of regulators, these technologies may pose unknown benefits and risks,” the report warned.
Interestingly, the report said that because of this very reason, “it would be beneficial for regulators to permit meaningful experimentation in the real world, subject to appropriate limitations.”
The report added that cryptocurrency and blockchain technology was being analysed separately by a working group of the Financial Stability Oversight Council – a government organization tasked with identifying risks and responding to emerging threats to financial stability.
Report offers glimmer of hope
These statements bring slight reprieve to the crypto community, which was recently hit by the U.S. Securities and Exchange Commission’s (SEC) rejection of a Bitcoin ETF proposal submitted by the Winklevoss Twins.
But the U.S. government’s response to cryptocurrencies has been mixed. Though the Bitcoin ETF proposal failed to get approved, the Commodity Futures Trading Commission (CFTC) seems to support the idea of at least studying digital currencies.
The CFTC is falling behind international government authorities in terms of regulation in the blockchain technology, according to J. Christopher Giancarlo, chairman of the CFTC.
But it’s not as if the government is not studying every aspect of virtual currencies. SEC official Eric Werner had discussed SEC Chairman Jay Clayton’s commitment to the issue of cryptocurrencies, saying he had walked into a “heated” discussion between Clayton and an attorney about digital coins.
This came to light from a recently released transcript of the June 4 roundtable on conduct standards for investment professionals.
“…I walked into a heated discussion he was having with an attorney in my office about the legitimacy and viability of cryptocurrencies. I was taken aback, honestly, about how much thought he had given to this space and the issues surrounding that,” Werner said.
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