Charles Hoskinson, one of Cardano’s co-founders, has said that regulation and legislation should be left to the United States Congress but software developers should be in charge of compliance.
Hoskinson’s commented that the best-case arrangement for cryptocurrency regulation is that there is a joint partnership between private platforms and public authority. Both the US Securities and Exchange Commission (SEC) and platforms should be working to establish the boundaries and conduct know-your-customer (KYC) and anti-money laundering (AML) protocols.
“It’s a public-private partnership. What needs to be done is to establish those boundaries, then what we can do as innovators is write software to help make that happen.”
Austin Scott, one of Georgia’s legal representatives weighed in on the matter, posing that neither the SEC nor the Commodity Futures Trading Commission (CFTC) have enough resources to oversee and regulate the cryptocurrencies that are in the market. He noted that it is not possible to regulate “all these currencies” or thousands of projects that exist and are emerging in the cryptocurrency industry.
Crypto regulation and compliance: Devs working hand-in-hand with regulators
In response, Hosksinson noted that if software developers build the ability to store and transfer data into a project (a major part of the cryptocurrency industry), a lot of the regulatory work would be conducted automatically. Along this line, he said that this would establish a self-regulatory ecosystem which would be able to guide compliance in the same way that the private banking industry does. He also suggested that the industry could create a system of self-certifying entities that would monitor compliance and if any sort of inconsistency or irregularity occurs, a financial authority would be able to review it. This would undertake the position of manual regulation, reducing the need for manpower overseeing cryptocurrencies.
He added, however, that there would need to be new rules into regulation built to work with the new emerging financial technologies, saying:
“This is a new technology and a radically new asset class that can not readily fit within the confines of the laws and tests created almost a century ago.”