BitOoda Regulatory Analysis, 3/12/21: Legislative Initiative Renews Optimism for U.S. Regulatory Clarity
Despite a few weeks’ hiatus from our regular regulatory assessments, we at BitOoda have continued to monitor and engage in the continued advancement of the U.S. regulatory landscape. Among recent developments we have followed are:
· New York Attorney General Letitia James’ industry alert on registration requirements and accompanying press release stating “you either play by the rules or we will shut you down,” a clear indication of continued regulatory tightening in New York (further evidenced by the NYAG’s settlement with Bitfinex and Tether that ended their New York operations).
· Statements by Gary Gensler (whose nomination for SEC Chair was just approved by the Senate Banking Committee), SEC Commissioner Hester Peirce’s continued advocacy for regulatory clarity (such as her recent speech in which she stated that the Commission has been “slow to provide regulatory certainty on a host of crypto-related issues, including when a sale of digital assets will be treated as a securities offering and when digital assets sold in a securities offering can trade without being subject to the securities laws”) and growing indications from Fed Chair Jerome Powell that the U.S. is steadily moving toward a decision on the Digital Dollar.
We are most excited, however, about a new piece of proposed bipartisan legislation — the Eliminate Barriers to Innovation Act of 2021 — which would establish a joint government-industry working group to (1) clarify the SEC and CFTC’s respective jurisdictions, (2) define rules for custody, private key management, and cybersecurity, and (3) enhance fairness, integrity, and efficiency to crypto markets.
We acknowledge that we have written optimistically in the past about crypto-related legislative proposals and that Congress has yet to pass — or even genuinely consider — any of the almost three dozen bills that have been introduced. However, we continue to believe that given the overlapping and ambiguous jurisdictions among the many federal and state agencies that claim a piece of the regulatory puzzle, and the resulting lack of a single coordinating body for the space, overarching national-level legislation remains the best way to establish a coherent framework for today’s digital asset ecosystem.
This new proposal has several key characteristics that we feel represent a sound approach:
1. It builds in the type of public-private collaboration that has been the hallmark of much of the regulatory advancement we have seen to date.
2. It would provide a structure to bring together the SEC and CFTC, as well as other relevant agencies, specifically to address and define their respective jurisdictions.
3. The bill’s chances of passage could be enhanced by the fact that the legislation itself does not advance specific reforms that would have to be debated on Capitol Hill, but rather directs a working group to analyze the issue and inform future decision making.
Bringing multiple regulatory agencies together with industry in a common process to enhance regulatory clarity across jurisdictions and asset classes would be a huge step forward for the regulatory picture in the U.S. As we at BitOoda continue to expand and build on our industry-leading regulatory stack, we also are increasing the sophistication and depth of the products and service we can offer institutional clients seeking compliant solutions. Contact us at email@example.com to discuss how we are applying our regulatory competitive advantage to optimize our clients’ strategies and positions.