Sheila Bair was chairman of the FDIC from 2006-2011 and was named one of TIME Magazine’s 100 most influential people in 2009. Recently, Bair sat down with Yahoo Finance where she emphasized the need for a regulatory framework with assets represented on a blockchain network.
How Cryptocurrencies are a Newfound Asset Class
When asked about her take on the overall crypto marketplace, “it’s a legitimate new asset class” responded Bair. Yet clearly, a lot of heavy lifting remains:
“I think people need to distinguish between blockchain technology, which has huge promise, and [cryptocurrencies]. I think [blockchain technology can] contribute to some of the sources of instability in our financial system and perhaps, you know create some disruptive competitive pressure to these large financial institutions,” said Bair.
Such comments prove highly optimistic for the future of securities tokens, especially when considering Bair’s experience with the FDIC. Originally founded in 1933, the FDIC’s original goal was to provide stability to the United States economy, to maintain such stability, and to regulate the nation’s public banking system.
“Over time, this could all be a very good thing for our economy,” -claimed Bair, in a recent interview via Yahoo.
Bair’s Remarks on the Need for Tokenized Asset Regulation
Despite such optimism in outlining the potential benefits of tokenized assets, Bair is well aware of the fraud and manipulation that frequently floods the cryptocurrency space. Her remarks entailed the following:
“There are a lot of [cryptocurrencies] out there— a lot of noise, a lot of stuff that’s not worth much of anything, if anything. I do think retail investors need to be very careful, I wish we had a federal regulatory framework for it. A lot of its going on in unregulated […] venues, the SEC I think has done a lot of good work, the CFTC as well, but Congress probably needs to step in with some type of federal regulatory framework, for the marketing, trading, and selling of these types of assets.”
Precisely what such regulatory framework should entail is perhaps the most difficult question at hand. What we do see with Bair is the awareness of a need for different regulations, based on asset types:
“It’s a new asset class […]. Do you go [with] more of a commodities, or of a securities and equities model? I think you know for something like Bitcoin, probably the closest thing I can think of is gold, so I think maybe more of a commodity-type of regulatory framework would work better. But some of these ICOs are clearly just fundraising vehicles and are economically equivalent to securities and so you might have to have some type of bifurcated system. But the important thing is to get a federal framework in place,”
What do you think of former chairman Bair’s comments on the future of cryptocurrency regulation? Will Congress step in and provide an effective model which does justice to securities tokens? Let us know what you think below.
Image courtesy of The Wall Street Journal.