The U.S. government needs to find the “sweet spot” in its oversight of the cryptocurrency ecosystem, Mick Mulvaney, acting director of the Consumer Financial Protection Bureau, said on Wednesday.
Speaking at the Future of Fintech conference hosted by research and analysis firm CB Insights, Mulvaney, who also heads the Office of Management and Budget, touted his pro-bitcoin credentials, noting that he is fiscally conservative and “was one of the founding members of the bitcoin caucus and blockchain caucus.”
Sympathies aside, he argued that regulation is important to protect investors – but the government should not discourage potential investors or developers from entering the market through burdensome laws or regulations.
Mulvaney explained:
“We knew at an early point in bitcoin that as with any developing financial technology we needed to find that sweet spot … if Mt. Gox became a regular occurrence it dramatically undermines confidence in the markets and prevents innovation. And if we over-regulate and discourage people from entering the marketplace, that has bad consequences too.”
In other words, Mulvaney said, “we’re looking for that Goldilocks [path] in the middle.”
He explained the concerns that might arise with a lack of investor protection, saying: “It’s a new and innovative technology, it’s a nonbanking system, it’s whatever. If people still can’t get access to their own money, that’s a problem. So the law’s functioning correctly there.”
What Mulvaney is trying to accomplish now, he argued, is ensuring that the application of an existing law doesn’t lead to unintended consequences.
“If for some reason we’re looking at you and the only way we can look at you is through the lens of the bricks and mortar financial institution, and because we do that it has this perverse or absurd result, that’s what we’re trying to identify and to prevent,” he said.
Mick Mulvaney image via CB Insights