US Government Watchdog: Regulations Are Hobbling DLT Innovation
US Government Watchdog: Regulations Are Hobbling DLT Innovation
The complexity of U.S. financial regulations is holding back distributed ledger technology (DLT) startups, the U.S. Government Accountability Office (GAO) says.
The GAO's finding, in a report published March 22, is part of a broader analysis of fintech that examines the benefits, risks and regulations associated with the sector. The office, often referred to as a "congressional watchdog," also offers recommendations in the report to improve regulation of the space.
DLT firms, among others, told the office that the lack of regulatory clarity in the U.S. "can result in some firms delaying the launch of innovative products and services - or not launching them in the United States" at all because they're worried about "regulatory interpretation."
The 132-page report goes on to say:
"The complex U.S. financial regulatory structure can complicate fintech firms' ability to identify the laws with which they must comply and clarify the regulatory status of their activities."
The GAO also identifies "fragmented state licensing and reporting requirements" as often being "prohibitively expensive" for DLT firms.
In the discussion of cryptocurrencies, the report identifies as risks the irreversibility of transactions, potential theft, and fraudulent token sales.
As for DLT, the report states that the technology could cut costs for consumers by reducing the operational expenses associated with payments and shrinking settlement times for currency, derivatives and securities transactions. It goes on to list cybersecurity and a potential 51 percent attack as concerns.
This is not the first time the GAO has studied fintech in general or blockchain and crypto specifically.
In April 2017, the office released a report that explored blockchain technology and outlined contemporaneous industry developments. At the time, it indicated it was unsure if new regulations were needed for blockchain technology and DLT.
Likewise, the GAO published a report in January of 2017 that suggested the IRS should take action to inform taxpayers of potential liability from investing their individual retirement accounts (IRAs) in blockchain-based assets.
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Some of these startup have a lot of seriously cool ideas (flaws too), but the main the thing I worry about is the simple fact of them having to cave on one of their ideologies or their privacy protecting methods in order to be allowed to stay in business.
As a company, there are many laws they are subjected to and several more they must comply with correctly (as you stated) to stay in business and or not be heavily penalized.
These requirements absolutely make it hard for free ideas and better technology to emerge. Does the startup choose the money they need to stay in business or do they take the stand and not bend on their ideologies?
I fear many cave in because of this; the whole point they got into business was to make money and if they want to stay in business they have to comply with all the regulations and laws.
Then there's the whole government just simply outlawing the use of DLT or saying it all must be centralized somehow or that it must somehow be allowed to snoop the traffic going into the DLT and out again, etc...
The more the regulatory agencies make it confusing, harder, etc... to hold up ideologies, only proves to me personally they only want to force control. I don't care what their reasonings are. Anyone who goes out of their way to tamp something down that hard only has an agenda of control.
Ever seen this type of behavior mimicked in romantic or family relationships?