A decade into the cryptocurrency revolution, the digital currency's future is awash with questions from regulation and enforcement to exactly what type of asset they are to the impact of volatility in market values.
Against this backdrop, Foley & Lardner LLP surveyed a range of executives and investors to gauge their views on the use, risks and regulation of cryptocurrencies. One key theme to emerge was that despite strong libertarian views that permeate the cryptocurrency industry, the majority of those surveyed see the value of thoughtful regulation. Most respondents (84%) believe initial offerings of cryptocurrencies should be regulated in the United States. In addition, 68% want regulations for ongoing purchases and sales of cryptocurrencies, and 55% say it's needed when it comes to paying for goods and services.
The survey also found respondents navigating an unclear legal environment. Nearly three-quarters (72%) say that the cryptocurrency industry does not have a well-grounded understanding of the application of existing regulation of financial markets or financial services. Their uncertainty is understandable as federal regulators have asserted their grounds for regulating aspects of cryptocurrency activities, but sent some mixed messages in the process. However, a recent speech by SEC Division of Corporation Finance Director William Hinman provided valuable insight into factors that could persuade the SEC that a particular token offering is, or is not, a securities offering.
Additional key findings that emerged from Foley's research include:
- Respondents favor self-policing, with 86% saying the cryptocurrency industry should develop common voluntary standards. Additionally, 89% say the industry should explore implementation of standards through formalized self-regulation, with most believing that any model of self-regulation should be subject to regulatory oversight.
- More than half of respondents (58%) are willing to take on legal risk to invest in or develop cryptocurrency businesses.
- A strong majority (72%) support the opportunity to invest in exchange-traded funds holding cryptocurrencies.
- Respondents are watching a range of potential risks, with hacking and security breaches seen as the most pressing threats to the viability and growth of the cryptocurrency industry. The theft of cryptocurrency tokens is viewed as a strong or very strong risk by 71%, and 61% said the same of the theft or "ransom" of data.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.