Consensus 2018 hosted a regulatory panel featuring Bittrex Chief Security Officer Kiran Raj alongside Robert A. Cohen from the Securities Exchange Commission (SEC), James McDonald from the Commodity F
Consensus 2018 hosted a regulatory panel featuring Bittrex Chief Security Officer Kiran Raj alongside Robert A. Cohen from the Securities Exchange Commission (SEC), James McDonald from the Commodity Futures Trading Commission (CFTC), Sujit Raman from the U.S. Department of Justice (DOJ), and moderator Steve Bunnell, Chair of Data Security and Privacy Practice and interim Chief Legal Officer of Bittrex. The conversation delivered what regulators have offered for years: calm assurances about protecting investors without stifling innovation.
The agencies outlined their mandates. The CFTC focuses on Bitcoin futures and other derivatives. The FCC aims to foster capital growth while maintaining fair markets and safeguarding investors. The DOJ pursues criminal cases. The SEC tackles fraud. All four stressed their commitment to protecting legitimate ventures and signaled that companies engaging in good faith with regulators would find cooperation.
Raj spoke for the industry. He called for clearer rules, noting that most companies want to comply but face a regulatory patchwork dating to the 1940s that obscures which rules apply. The problem cuts deeper. These rules solve problems from decades past. They barely address today. They won't touch tomorrow.
Decentralized applications have multiplied. In 2016, when I covered the Blockchain Summit in Washington, dapps remained theoretical. Augur had launched. OpenBazaar was testing. That's changed. Ethereum and competing platforms spawned dapps at scale. Decentralized exchanges exist, though they move too slowly for high-volume trading. OpenBazaar operates. Every conference speaker pitches their dapp as the next frontier.
The SEC focus on fraud matters. The agency has dismantled schemes like Paycoin for years. But the audience knew that. Regulators should have discussed: What happens when schemes become decentralized? When money-laundering dapps proliferate? Will regulators target users? Code creators? Criminalize the software itself? These questions should occupy regulators now, before thousands adopt these systems. Perhaps no future rule could contain dapps, but regulators could at least lay out a strategy. The silence suggests they have none.
Regulators at Consensus absorbed marketing for hybrid exchanges like IDEX and CryptoKitties. They heard about OpenBazaar. Do they grasp that a copycat could spawn a decentralized Silk Road? Shapeshift's COO touched on this in a later talk. European Parliament member Antanas Guoga addressed it. U.S. regulators offered nothing.
Maybe they believe ignoring the gap lets criminals keep using traditional systems. That calculus expires once enforcement tightens. The moment scams and underground markets face consequences through old channels, operators pivot to safer ones.
Consider the SEC designating CryptoKitties an unregistered security and cracking down. Part of CryptoKitties runs decentralized. Regulators shut the web interface, website, and detain the builders. CryptoKitties remain. Holders keep them, like Paycoins still circulate. Unlike Paycoin, CryptoKitties have utility. Users want to breed and trade them. Months pass. Someone builds a decentralized website and breeding system. The SEC does what then? Declare ownership illegal? Treat it like heroin?
No Q&A followed the panel. That was unfortunate. Someone would have asked the question. Instead, the regulators patted themselves on achieving clearer oversight compared to prior years. The future arrives. This panel exposed how unprepared they remain. Same as they were in 2009 when Bitcoin started.
