BitOoda Regulatory Analysis, 7/27/20: U.S. Crypto Leaders Increasingly Vocal on Key Issues
Last month, we wrote about the changing face of U.S. digital asset regulatory leadership. In the past week, we have seen significant statements and actions from these advocates in support of the advancement of U.S. digital asset policy and strategy on a range of key issues:
· Acting Comptroller of the Currency Brian Brooks announced the issuance of an interpretive letter from OCC stating that nationally chartered banks can provide custody services cryptocurrencies. In our view, this move will open the door to increased adoption, and represents one of the first examples of the U.S. taking the global lead in setting a positive regulatory precedent.
· SEC Commissioner Hester Peirce criticized the Commission’s actions against Telegram, saying “I do not support the message that distributing tokens inherently involves a securities transaction.” Peirce also addressed SEC’s broader approach to digital assets, stating “enforcement actions can be instructive to people other than the wrongdoer, but are not an appropriate mechanism to create new law.” We have consistently written on the differences between the CFTC’s principles-based approach and the SEC’s regulation-by-enforcement approach, and are heartened to see increased discussion of the need to reconcile them in a way that recognizes the unique aspects of digital assets and the importance of supporting continued innovation in the space.
· Voices of advocacy also are getting louder in terms of initiating an effort on a Digital Dollar. Former CFTC Chair Chris Giancarlo continued his push at a Senate hearing on economic cooperation with China — proposing a series of pilots focusing on different applications — while former CFTC Commissioner Sharon Bowen said the U.S. is “falling a little bit behind” in the global pursuit of digitized national currencies, and World Economic Forum blockchain lead Sheila Warren said that “the U.S. is late to the game.” (Side note: we can add France to the list of countries forging ahead with a digital currency, as its central bank just selected eight banks and other firms to test potential systems.)
· While Federal Reserve leadership continues to shun the Digital Dollar, the Fed’s Robert Bench on a recent webinar said the U.S. had “better be ready” if an event occurs that “could require us to take action” on a CBDC. While Bench appeared to skirt the Fed’s official policy line with this statement, it certainly appears that there is increasing recognition within the Fed that additional exploration is needed.
· And finally on Capitol Hill, Representative Darren Soto introduced two amendments to Congress’s annual defense spending bill, including adding blockchain and DLT to the definition of “emerging technology” so that it can be included in official government assessments of the country’s policies and initiatives to encourage global technological leadership. Soto is among a growing number of Congressional leaders championing digital asset legislation.
From our perspective at BitOoda, the SEC’s approach to regulating token issuances, the continued integration of crypto into the mainstream economy (e.g., banking services), the journey — which we see as inevitable — toward a Digital Dollar, and the ultimate need for Congress to pass legislation to modernize U.S. digital asset governance are critical topics that will continue to shape the overall ecosystem in which we and our clients transact. We are particularly interested in the debate over the proper regulatory treatment of token issuances, and we hope that Peirce’s criticism will lead to a more thoughtful way of handling SAFTs and other compliant development efforts. In the meantime, we continue to leverage our industry-best regulatory stack to pursue opportunities for our clients to transact compliantly with a growing number of financial instruments in an ever-expanding market landscape.