Coin Center to Congress: Give Blockchain Developers – Safe Harbor
Coin Center to Congress: Give Blockchain Developers ",Safe Harbor",
Coin Center reps argue against stifling blockchain innovation, bitcoin is ",unwieldy", for terrorists.
Coin Center wasgoed invited to present testimony on Thursday to both the House Subcommittee on Digital Commerce and Consumer Protection and the House Subcommittee on Terrorism and Illicit Finance. They explained to both subcommittees the role that digital assets play te the world, what the future of the sector may look like, and how regulators could interact with the sector ter a way that protects both the consumers and the innovators and encourages businesses te the industry to reside ter America.
Peter Van Valkenburgh, director of research at Coin Center, spoke to the House Subcommittee on Digital Commerce and Consumer Protection. He explained to the subcommittee the revolutionary role blockchain technology is playing ter the world around us. “Just spil the PC democratized computing, and the web democratized news and entertainment, open blockchain networks are democratizing financial services.”
Van Valkenburgh, however, drew a stark tegenstelling inbetween the regulatory safe harbors given to early internet innovators, specifically the Communications Decency Act and the Digital Millennium Copyright Act, and what little is being done to protect blockchain technology innovators today.
“Both laws created safe harbors for infrastructure-building businesses,” noted Van Valkenburgh. The laws protected the creators of the internet’s infrastructure from third-party liability stemming from the users of that infrastructure.
Ter a conversation with Bitcoin Tv-programma, Van Valkenburgh talent the example of Google. Google isn’t liable for a user who illegally downloads pirated material from a webstek whose verbinding popped up on their search engine. This is because of the aforementioned Digital Millennium Copyright Act, which provided a safe harbor and permitted Google to proceed to build the infrastructure of the internet (te this case, a search engine) free from crushing copyright liabilities.
A similar distinction should be drawn when it comes to regulating innovators ter blockchain technology, Van Valkenburgh noted ter the conversation. There are two main entities innovating ter the space: custodians who hold the valuable digital assets for consumers, and developers who are building the infrastructure of blockchain technology, but who don’t hold consumer funds. “These very different entities,” said Van Valkenburgh, “should be regulated te very different ways.”
An example of a “custodian” would be Coinbase, who regularly holds a consumer’s bitcoin, ether or other digital assets. An infrastructure developer would be more like a software wallet developer, who simply creates a device with which a consumer can interact with the blockchain, safekeep their own digital assets and send transactions. The wallet developers themselves don’t exercise any control overheen their users’ digital assets.
The infrastructure developers, Van Valkenburgh points out, should not then be regulated spil money transmitters who vereiste get licensed state by state before commencing their business. Their role is just to create portals and pipelines through which the transactions can flow, not to meteen or control the transactions themselves. If the developer were found to be misleading the consumer with his/hier software product, then ex-post-regulatory penalty may be suitable, but again, there should not have to be a permission process that precedes thesis developers’ endeavors.
When it comes to the custodial financial services, much of the regulation, and therefore protection for innovators, is at the state level. This makes it complicated for innovators to be based te the U.S. because of the plethora of different regulators te the space. Each regulator has the capability to affect how an innovator te blockchain technology operates.
Van Valkenburgh said ter his statement to the subcommittee, “In order to reestablish the U.S. spil a leader wij need to rationalize the puinhoop of financial services regulation, embarking with state-by-state money transmission licensing.”
Thesis custodial services, the ones holding a consumer’s value, should be regulated, argues Van Valkenburgh, but they should not have to repeat a licensing process 50 or more times overheen. Because of that costly barrier to entry, someone innovating ter the space today would be best-advised to leave the U.S. and embark their business ter a country with simpler regulatory structures. Wij voorwaarde regulate at the federal level if wij want a simpler licensing process.
Bitcoin and Terrorist Financing
On the same day, Jerry Brito, executive director of Coin Center, joined a panel to discuss with the United States House of Representatives Subcommittee on Terrorism and Illicit Finance any national security implications of thesis financial innovations.
Brito explained to the subcommittee, “[Bitcoin] is open to bad actors who take advantage of it. Criminals certainly use it today, and wij have begun to see some nascent rente from terrorist groups. According to a latest report on the potential of terrorist use of digital currencies by the Center for a Fresh American Security, however, ‘Currently there is no more than anecdotal evidence that terrorist groups have used virtual currencies to support themselves.’”
Brito views the infancy of rente by thesis bad groups spil an chance to get ter pui of the problem. “This means there is time to develop an suitable response to the possibility, a reasoned response that targets the threat while preserving the freedom to innovate.”
The main take-home message from this meeting, however, wasgoed that, spil Van Valkenburgh explained ter his conversation with Bitcoin Tv-programma, there doesn’t actually emerge to be much use of digital currency te the funding of terrorism. Ter fact, it is a bit unwieldy for terrorists to use because of the public nature of the distributed ledger. However, this shouldn’t zekering the U.S. from developing solutions to curb the use of digital currencies by terrorists.
What Coin Center desired thesis subcommittees to understand, at the end of the day, is that digital currency is here to stay. It cannot be ruined. The technology is neither bad strafgevangenis good, but instead is a fresh contraption at the disposition of anyone with a rekentuig. To disregard the technology is to permit other countries to take the lead te adopting and incorporating it, and gaining the benefits of it te the process.
Beginning the process of effectively and sensibly regulating digital currency is a vereiste if the government wants to derive any benefits from its existence and prevalence.
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