US Rep And Crypto Supporter Warren Davidson, Condemns SEC Practices, Voices Concerns About Libra
The Libra Fiasco, as one may call it, is something that’s been going on for a while now. Luckily, there is a potential reprieve coming after Mark Zuckerberg stands before the House Financial Services Committee on the 23rd of October. Warren Davidson, a US Representatives, gave the press his thoughts over this and the Securities Exchange Commission’s (SEC) flaws in their attempts to regulate cryptocurrencies as a whole.
Davidson is a congressman known to most of the crypto world. He’s most famous for his role in creating the Token Taxonomy Act. However, his optimism for blockchains’ use in the US has been well established as well.
Libra Should Be Considered A Security
Davidson had an obvious issue with the catch-all term “cryptocurrency.” In a discussion about the regulation of digital assets, he complained that people use the term as a catch-all term. They used it for anything inside the crypto classification. This is something Davidson describes as sloppy language, on everyone’s part. He stressed that people need to focus on Libra’s goal: To be a currency. He emphasized that people shouldn’t bundle Libra up with other things inside the crypto space, not what they want to do, and not with how we regulate them. He expressed his opinion that Libra should be applied to the Token Taxonomy litmus test.
Using this, Davidson determined that Libra should ultimately be considered a security. As security, Libra falls within the authority of the SEC, within their operations in the US. He reasoned that was due to being susceptible to a central organization's influence over the composition of Libra. While it was initially planned out that Libra’s value will be attached to a “basket” of currencies, it may no longer be the case. David Markis, Head of Calibra, had suggested yesterday that this could change, instead of being valued through fiat-pegged stablecoins.
In terms of Libra’s security classification, Davidson had a few words to say. He explained that the classification had nothing to do with the fact that it was a stablecoin. He instead pointed out that there’s a central authority with the capacity to alter the digital asset. Davidson was highly unconvinced that Libra will remain fixed and stable with its planned basket of currencies. Instead, he suspects that the Libra Association would tamper with it. He conceded that Clayton, the SEC chairman, made the correct assessment that Libra was more of a security than a currency.
SEC: Compared to Third World power structures
While Davidson has a desire for Libra to be under SEC jurisdiction, he had negative opinions of their current modus operandi. The main constituent of their operations is reviewing applications and giving out no-action letters. Of the hundreds of firms that applied, they only dolled out two.
He stated that he told their Chairman, Jay Clayton, that the SEC has as much inefficiency and charm of a third world power structure. Davidson explained that it’s a terrible method of regulation within an economy’s regulations. According to Davidson, proper regulations would be passing a single law, becoming the uniform standard for all involved parts. He explained that it’s what a first-world country would do.