Hoskinson believes that the crypto sector’s laws should be more specified, but that compliance should originate from the business itself, not regulatory bodies.
Charles Hoskinson, a co-founder of Cardano, urged Congress that it should regulate cryptocurrencies but leave compliance to software developers.
During a June 23 congressional hearing, Hoskinson compared the ideal setup for crypto regulation to how banking self-regulation works, saying to lawmakers “it’s not the SEC or CFTC handling KYC-AML, it’s banks.”
“This is a public-private collaboration. It is necessary to set these limits; then, as innovators, we can create software to facilitate their implementation.”
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are two of the financial regulators disputing crypto sector authority.
Representative Austin Scott of Georgia, a Republican, said that neither the SEC nor the CFTC has the personnel to supervise the hundreds of cryptocurrencies on the market, stating, “It is impossible to regulate all these currencies.”
Hoskinson said that the capacity of cryptocurrencies to store and transmit data meant that a significant portion of this regulatory work could be performed automatically. In addition, he cited this as a reason for allowing the crypto business to establish self-regulating organizations (SRO) to advise regulatory compliance, similar to the private banking industry.
Hoskinson proposed that the industry should build a “self-certification system” that would automatically monitor compliance until an abnormality was detected, at which time it would be reviewed by a financial authority.
Hoskinson predicted that even quadrupling the capacity of the Internal Revenue Service (IRS) would not be sufficient to audit every American, indicating further why manpower should not be an issue for crypto legislation.
Hoskinson instead informed Representative Scott that cryptocurrencies may be designed to prohibit transaction settlements until legally necessary checks are conducted.
Compliance with U.S. law and legislation “must be a guiding principle for the blockchain industry,” Hoskinson said in a June 23 testimonial published on the IOHK website, demonstrating his eagerness to collaborate with federal authorities on the development of new standards.
“However, this is a new technology and a fundamentally new asset class that does not easily fit inside the limitations of regulations and standards developed over a century ago.”
Hoskinson’s concerns for clearer crypto regulatory limits match those of other industry insiders in the United States in December. SEC Commissioner Hester Peirce recently attributed the SEC’s persistent rejection of Bitcoin spot exchange-traded funds (ETFs) to a lack of regulatory clarity.