CFTC commissioner is on board with the bitcoin-related technology.
Bitcoins could have saved Lehman Brothers, sort of.
On Tuesday, J. Christopher Giancarlo, a commissioner of the Commodity Futures Trading Commission, said that if the blockchain—the technology that backs bitcoins—had been around in 2008, and had Lehman Brothers used it, then the investment bank bankruptcy that officially kicked off the financial crisis would never have happened.
Giancarlo claims that the use of a blockchain, which is the digital accounting protocol that currently powers Bitcoin transactions but is increasingly being tested for other transactions, would have made it plainly obvious to regulators that the company’s financial moves were veering off into tenuous territory. “If an accurate [blockchain] record of all of Lehman’s transactions had been available in 2008, then Lehman’s prudential regulators could have used data mining tools, smart contracts and other analytical applications to recognize anomalies,” says Giancarlo. “Regulators could have reacted sooner to Lehman’s deteriorating creditworthiness.”
Based on that, Giancarlo says regulators should not get in the way of banks that have recently been testing using the blockchain for uses. Giancarlo compared the emergence of blockchain to the Internet’s evolution, and urged adopting a “do no harm” regulatory doctrine towards the development of blockchain identical to the edict the government made regarding the growth of the Internet more than 20 years ago.
Accomplishing a “do no harm” mandate would require the various regulatory agencies, including the FDIC, CFPB, and FinCEN, among others, to work together to form a simple guiding framework that the banks could follow without worry over whether or not they are jumping through the all the different hoops these agencies would otherwise set up on their own. Fortune reported in December t hat J.P. Morgan Chase and other banks were testing blockchain technology.
Nonetheless, it’s not clear blockchain is […]
