Cardano founder urges US regulators to adopt internet-style approach to crypto regulation

Cryptocurrency regulation should be carried out as a public-private partnership modelled on the internet. This view was voiced at a US congressional hearing by Cardano founder Charles Hoskinson.

“I and many others in the industry are advocates of proper and responsible regulation of digital assets and blockchain. However, this is a new technology and a radically new asset class that cannot easily fit within laws and tests devised almost a century ago,” Hoskinson said.

According to him, due to the variety of cryptocurrencies and use cases, they cannot be neatly labelled as securities or commodities. They could be the first, second or even both of these assets at once, Hoskinson says.

He noted that US lawmakers have not yet faced regulation of something that “could be such a large number of different things at once.”

• Existing US regulatory regimes have never contemplated assets like these;
• Without cryptocurrencies, blockchain technology does not operate;
• Rules should promote adequate protection for consumers and market integrity.

“Recognising that category-based regulation bounded by the confines of a given jurisdiction, and relying exclusively on centralised entities for reporting and disclosure, is unlikely to be effective in a decentralised, blockchain-based ecosystem and would hinder innovation,” he said.

Hoskinson argues that US blockchain regulation should follow the internet model. Instead of a single supervisory authority, thousands of interconnected agencies and private firms work together in the country, he emphasised.

“Similarly, many different agencies will be needed to work with the private sector to ensure the thriving of the American blockchain industry and to allow it to realise its full potential,” Hoskinson said.

In response to a question from Congressman Austin Scott, he noted that blockchain technology enables much of regulatory action to be automated. As an example, Hoskinson cited the ability to program a transaction to be blocked before its regulatory-compliance check is performed.

As noted, Federal Reserve Chair Jerome Powell stated that the crypto industry needs ‘a better regulatory framework’.

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