BitOoda Regulatory & Geopolitical Analysis, 7/13/2020: Finally a light at the end of the U.S. regulatory tunnel?
For most U.S. firms in the digital asset space, operating compliantly has been a considerable challenge due to the jumbled mix of federal and state agencies involved in different aspects of crypto regulation, which has created overlapping jurisdictions, gaps in formal and informal rules, and broad regulatory uncertainty. We have joined other voices in calling for a comprehensive national framework for digital asset governance and a clearer indication of a the country’s digital asset policy and strategy. However, neither the Treasury Department nor the SEC have been able to cut across executive-branch agencies to pull together a cohesive plan, and Congress has yet to seriously consider a bill to modernize the country’s digital asset regulatory framework despite increased engagement and the introduction of a number of bills that would do just that.
Finally, we have seen a tangible start to an effort that could enable progress on overcoming the challenges and ambiguities of today’s regulatory landscape, as the CFTC has initiated an effort as part of its 2020–2024 Strategic Plan to “develop a holistic framework to promote responsible innovation in digital assets,” and to “harmonize regulations for market participants subject to concurrent CFTC and SEC jurisdiction.” The Commission published its plan on the heels of an interview last week with Chair Heath Tarbert in which he expressed his desire for better clarity on token classification and international regulatory cooperation, again touted his principles-based approach as particularly applicable to digital assets, and acknowledged that the U.S. is not a global leader from a regulatory standpoint.
We are encouraged by CFTC’s initiative and applaud Tarbert’s efforts to step up as the U.S. struggles to define its role in the future global digital economy. We continue to believe that Congressional legislation will be needed at some point to provide executive agencies with the flexibility they need to move beyond the decades-old laws on which they still rely, but acknowledge that there is much that can be done by the regulatory bodies themselves to enhance the clarity of the country’s approach and reduce the regulatory burdens that have inhibited the growth and development of the U.S. market.
As institutional engagement and broader adoption of digital assets continue to increase, improving the ability of market participants to navigate the regulatory arena will reduce the barriers to entry and innovation, further bolstering the work of firms such as BitOoda who are dedicated to driving market advancements in a compliant manner to achieve optimal outcomes for our clients.