Former New York City mayor Mike Bloomberg recently announced his entrance into the race for the Democratic presidential nomination by spending huge amounts of money to buy ads nationwide. This hard press across TV, radio, and online media has resulted in remarkable name recognition and interest in his campaign, which will enable Bloomberg to join the other leading Democratic contenders on the debate stage in Las Vegas, Nevada, tonight.
Bloomberg also just released his proposed financial reform policy. The policy covers a number of reforms that other Democrats' proposals have already touched on to varying degrees, including strengthening the Volcker Rule and the Consumer Financial Protection Bureau (CFPB). More unusual, Bloomberg's proposal also includes new regulations for cryptocurrencies.
"Cryptocurrencies have become an asset class worth hundreds of billions of dollars, yet regulatory oversight remains fragmented and undeveloped," according to Bloomberg's policy statement. "For all the promise of the blockchain, bitcoin, and initial coin offerings [ICOs], there's also plenty of hype, fraud, and criminal activity. Mike will work with regulators to provide clearer rules of the game."
To make cryptocurrency trading and payment processes more transparent, Bloomberg proposes to establish regulations that would:
- Clarify who is responsible for oversight of cryptocurrencies
- Provide a framework for ICOs by defining when virtual-currency tokens are classified as securities (and when they are not)
- Clarify tax policy on cryptocurrency investments
- Specify capital requirements for financial institutions' cryptocurrency-denominated holdings
- Protect consumers from cryptocurrency-related fraud
Nigel Green, CEO of global financial consultancy deVere Group, emphasizes the importance of Bloomberg's inclusion of cryptocurrency regulation in his policy proposal. "The staggering pace of the digitalization of economies … underlines that there will be—must be—growing demand for digital, global, borderless money," Green says. "Michael Bloomberg is, to date, the only candidate to become president of the world's largest economy who has devised a coherent plan for cryptocurrencies."
Although virtual currencies are still in their infancy, Green believes that "regulation is necessary … [to] provide further protection for the growing number of people using cryptocurrencies." The more tightly cryptocurrency markets are regulated, he adds, "the less likely it will be that criminals will use these digital payment methods, the less potential risk there will be for the disruption of global financial stability, and the more potential opportunities there will be for higher economic growth and activity in those countries which introduce it."
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