A couple of weeks ago, we learned about the ongoing debate in the financial industry over whether to regulate the artificial intelligence that powers cryptocurrency mining and trading.
While some of the discussion centered on the potential for cryptocurrencies to lead to an explosion in fraudulent activity, a larger part of the debate focused on whether cryptocurrencies are actually capable of creating value or whether they’re just a bunch of hot air, a view echoed by a number of prominent figures in the industry.
The Wall Street Journal editorial board is among the most vocal supporters of the former, with an article published in the magazine’s November 2017 issue stating that “the cryptocurrency market is not in a bubble, it’s just not being watched closely enough.”
The article went on to suggest that regulators could have a “serious impact” on the cryptocurrencies industry if they didn’t act.
While the WSJ editorial board may not have a strong opinion on cryptocurrencies right now, it does seem to be a major player in the debate.
And in a piece published by the Financial Times, a number at the Financial Services Industry Association (FSA) told the Financial Post that they believe cryptocurrencies are on the “front lines” of a financial industry that “cannot wait” for regulators to regulate them.
“It’s a big issue, it really is,” said John A. Bresnahan, the FSA’s executive director.
“I think the whole crypto space is a lot of the issue right now and there’s a lot more work to be done.”
Bresnicka, who also served as CEO of the Federal Reserve Bank of San Francisco from 2009 to 2015, said that there is a need for regulators in the United States to “think about the implications of this and the implications that it will have for people like us in the real world.”
“It would be nice to see the government start looking at the whole space more seriously,” Bresniakas said.
“The industry is very much in the business of creating things that have value.”
Bremner, who served as the FSA executive director from 2011 to 2016, added that the “big question is whether it’s going to have a role in a regulatory environment that can have real impacts on the economy.”
Bremsky, who is also a former senior advisor at the FSA, agrees that cryptocurrencies are “an important part of this ecosystem.”
“I’m not convinced that we’ve seen enough regulatory attention paid to them,” Bremksky said.
That being said, Bresnis, who currently serves as the deputy director of the Securities and Exchange Commission (SEC), thinks that there are a number regulatory issues that the industry should be aware of.
“We need to understand how cryptocurrencies are designed and who is developing them,” he said.
“[Regulators] need to have an in-depth look at them.”
That in itself is not an all-inclusive list of the issues that Bresnyas and Bremski have discussed, but the two believe that regulation could be helpful in addressing a number issues.
For one, regulation could allow regulators to focus more on the risks that cryptocurrencies pose to the financial system.
“In the short term, it could help us to look at the underlying issues, to get more detail on the issues,” Brereski said.
However, regulation would also make it harder for cryptocurrencies like bitcoin to become a mainstream currency.
While Bresnays belief that cryptocurrencies would become more mainstream is likely based on the fact that they have become increasingly popular, it doesn’t mean that cryptocurrencies can’t become more accepted in the mainstream financial system if regulators look beyond the technology and focus on its underlying underlying principles.
In fact, the same people who pushed to get regulators to consider the use of artificial intelligence in financial markets are also pushing to regulate cryptocurrencies as well.
“This industry has been so successful because of its simplicity, its lack of complexity, its ability to be decentralized and to be untraceable,” B Remksky explained.
“And it’s easy to make mistakes, but if we can look at it more closely, if we understand it more, and if we’re not just looking at it from a technical perspective, if that’s something we can use in a more systematic way, I think that could be a big thing.”
The Financial Times piece, by the way, was written by Jamie Bremnikas, who was a senior advisor to the Federal Deposit Insurance Corporation (FDIC) from 2011 until he left to join the FSA in 2017.
While there is some overlap between Brems and Bresneks positions on cryptocurrencies, the FFA’s Bremkys’ position on cryptocurrencies is very different than Bremnys.
While both are proponents of cryptocurrency regulation, the two also share the belief that regulation can help to combat some of these concerns.
“If the market really is that sophisticated and it’s all about making smart decisions, then there’s going be a lot