Typically, we at BitOoda maintain a global perspective on all things crypto, including regulatory developments; in our writeup this week, however, we are going to focus on the continuously-evolving U.S. political debate on digital asset regulation. Particularly in light of the question we addressed last week about the potential for increased regulation, we wonder whether developments this week indicate the potential convergence of views from the SEC, industry CEOs, and U.S. Congress, and what that might mean in the near term.
· For anyone who follows crypto regulatory developments, we recommend reading the most recent speech by SEC Commission Hester Peirce (a.k.a., Crypto Mom) in which she touches on digital asset cross-border regulation, proposes a safe harbor for the offer/sale of certain tokens, and concisely summarizes recent SEC activities in the context of the overall approach taken by the U.S. and various countries in Asia and Europe. She stated, “the U.S. will fall behind other countries in attracting crypto-related businesses unless we are more forward-leaning in establishing a regulatory regime with discernible parameters. … Legislative proposals to exempt token offerings from the securities laws also recognize that the securities framework may not be the appropriate one for all tokens. … I would like to see more focused momentum at the U.S. SEC toward finalizing our regulatory regime for digital assets.” We couldn’t agree more!
· In the latest from Capitol Hill, Circle’s Jeremy Allaire testified at the Senate Banking Committee hearing on “Examining Regulatory Frameworks for Digital Currencies and Blockchain.” Despite his call for new legislation defining digital assets (thus requiring changes to existing commodities, securities, and banking laws), most of the hearing focused on the broader issue of financial inclusion. Senator Mike Crapo also remarked that “digital technology innovations are inevitable, could be beneficial, and I believe that the U.S. should lead in developing these innovations and what the rules of the road should be.” We couldn’t agree more!
· In an open letter to U.S. Congress, Ripple’s CEO and Executive Chairman stated “We urge you to support regulation that does not disadvantage U.S. companies using these technologies to innovate responsibly, and classifies digital currencies in a way that recognizes their fundamental differences… Without regulatory clarity, we risk pushing the innovation, tax revenue and jobs that these new technologies create overseas.” We couldn’t agree more!
After years of regulatory fact-finding, exploratory hearings, and regulation via ad hoc enforcement, are we finally at a point at which SEC Commissioners, industry CEOs, and U.S. Senators are converging around the need for a clearer regulatory framework supported by legislation that reflects the realities of today’s financial system? While this potential emerging consensus should make us optimistic in the near-term (by now, even the UK’s Financial Conduct Authority has clarified its crypto definitions, jurisdictions, and requirements), why do we have the feeling that progress on any meaningful crypto legislation will not occur in a timely enough manner to enable us to continue to develop fully mature markets? Obviously, no one knows exactly how the political winds will blow, but with next year’s election already on the horizon, we are increasingly skeptical that there is sufficient time for the current administration to take a critical look at a new legislative foundation for digital asset regulation. For our part, we will continue to push for the advancement of industry standards and the increasing institutionalization of the market.