Analyzing US Congressional and Regulatory Interest in Cryptocurrencies
A perspective from someone who has worked with the US government as a management consultant for close to 15 years, with a decent understanding of public policy, economics, and cryptocurrency / blockchain technology.
This Congressional testimony / hearing is very interesting so far. The tone is exceedingly positive so far, in my opinion. Right now, this is a very small market, but they know it's going to grow, and public interest is massive. ICOs are the flashpoint that has caught their attention, but this story goes far beyond ICOs and "tokens as securities."
At this point, they are just trying to figure out how to get the government organized to oversee this technology (one agency, or defined roles for multiple agencies- including SEC, CFTC, CFPB, Treasury, Federal Reserve). As a US public policy expert, I can tell you this type of distributed structure is a disaster for overseeing an emerging technology like blockchain. There needs to be a "lead" agency. And they need to employ knowledgeable and qualified professionals.
But from this hearing, and many other conversations I've had with government officials over the past year, there is a recognition that this is a global phenomenon that no one government can / will control. At this point, the US government's primary interest in regulating this technology is in protecting consumers from fraud and manipulation. Do not forget that. They might not fully understand the value proposition of this technology at this point (look no further than the SEC Chairman, Jay Clayton for an example of that), but they definitely do not want to quash innovation in this space either- otherwise, they know they risk sacrificing US economic competitive advantage in the future.
And make no mistake, the US government is also incredibly interested in using this technology to improve the quality and efficiency of the services they provide to their citizens. I can't go into details, but know that this is true and being researched heavily.
As Ethereum (and more broadly, "blockchain) scales and shows real societal and economic value, beyond just speculative financial value, the tone of these agencies will evolve further. They will view this as an important, foundational technology which cannot be ignored. Just like what happened with the internet. Right now, those benefits aren't readily apparent, but make no mistake, this will change in the next 2 years.
I have plenty of worries about the cryptocurrency market, but at this stage, very few of them have to do with possible government regulation.