The push toward tighter regulation and transparency in the virtual currency market continued Tuesday during a two-hour Senate hearing. J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission, and Jay Clayton, from the Securities and Exchange Commission, testified on Capitol Hill, addressing concerns from senators on both sides of the aisle.
Both officials, appointed by President Donald Trump - a proponent of looser financial regulation - agreed that they support the existence of virtual currencies but stressed that continued regulation is required to satisfy both regulators and everyday investors who remain skeptical.
"As Chairman Giancarlo and I stated recently, we are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate," Clayton said in a prepared statement.
"We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space."
After delivering their prepared statements, both were grilled by senators, many of whom are calling for tighter controls. With the bitcoin market still in its early stages, senators noted that the ability to manipulate the market remains high, citing the price in of bitcoin in South Korea, where it trades at a premium caused by tight capital controls.
While in agreement, Giancarlo noted that as the market matures the ability to arbitrage will subside.
The debate didn't deter cryptocurrency investors as prices continued to rise after the morning's slide. After plummeting below $6,000, a 17% decline on the day, bitcoin pricesBTCUSD, -5.15%erased all losses and continued to rise throughout the hearing, reaching an intraday high of $7,418.88, according to CoinDesk.
Despite the relief rally, bitcoin has fallen more than 40% since last week's start, corresponding with the broader selloff in global equities. However, regulators seem to be dismissing the correlation and taking credit for the decline themselves, "I think the message is getting through that this is not off the grid. And now you're seeing it in the bitcoin price, and as the word is getting out that we will go after this," Giancarlo said.
Whatever the outcome, the debate will continue as the cryptocurrency market remains an enigma to many. However, despite the ongoing push back, it's clear that the cryptocurrency market is here to stay in some form or another. "Senators and regulators are certainly concerned about fraud and volatile markets in cryptocurrency," Jerry Brito, executive director at nonprofit research group Coin Center, said in a note.
"But it was clear from today's hearing that they also understand, as Senator [Mark] Warner suggested, that it may be as transformational as mobile telephony, that Americans have a right to own and use cryptocurrencies and tokens, and that we can get to a policy approach that fosters responsible innovation in this space."