On 19 September the Commission on securities and exchange Commission (SEC) received a letter, which has been sponsored by Bitcoin Core developer Brian Bishop, former managing Director of Bank holding company Morgan Stanley’s Caitlin long, a pioneer of developments in the field of electronic Commerce Christopher Allen, founder of blockchain unit of the auditing company Ernst & Young Angus de Crespigny and investment funds lawyer Gavin Fieri. Together they warned the Agency about the dangers of inappropriate management of enterprise the introduction of bitcoins for the technology.
In particular, the authors drew the attention of the division of investment management at the SEC on the part of the operator’s plans, the new York stock exchange Intercontinental Exchange to launch integrated platform for digital asset Bakkt.
“Bitcoin is a fundamental technological system with many small but important aspects. This concept assumes that the implementation of the rules provides software, mathematics and cryptography, not politics,” said the Bishop, advising the SEC to work directly with the developers of the first cryptocurrencies in the scope of the new regulatory framework.
The authors cautioned the Agency from the use of digital assets with rules that will not allow them to reveal your strengths. In particular, the traditional financial industry practice of storing the client’s funds in the single account.
“Digital assets are initially separated; for the best protection investors need to keep this native segregation in the core architecture technology,” the letter reads.
SEC, I think they should introduce some restrictions on the use of traditional practices platform Bakkt.
The authors added, if Bakkt will keep all funds in a single account and use them for lending and investment, may form a mix of cash collateral of the borrower and money lender. This phenomenon could be observed during the financial crisis of 2007-2008. Moreover, mixing bitcoins in one account can lead to a hacker attack.
The letter also States about the dangers of so-called perezaluzhenie when an organization claiming to speak certain funds and lends them to another organization, whereupon the latter says the same thing.
The authors recommended that the SEC coordinate the development of new rules for custodial services cryptographers, software developers and smart contracts, bitcoin exchanges and existing organizations that manage digital assets of clients.
“Do not consider bitcoin as in the usual financial instrument, because it is not. Do not use the old rules to the new system,” said Caitlin long in a commentary for Forbes.
Previously CEO Bakkt Kelly Lafler said that the platform does not support margin trading, and all transactions are fully secured by assets.
Also, the platform also intends to create a guarantee Fund in order to avoid default.
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