Drawing on International Examples to Inform U.S. Digital Asset Regulatory Reform.
As interest and global participation in digital assets and their associated technologies grow in volume and attention, early-mover countries are updating and modernizing their regulatory and legislative architectures to reflect the reality of this new asset class and attract investment. The
U.S. government has taken a wait-and-see, “do-no-harm” approach designed to explore risks and opportunities while preventing a regulatory failure that would cause significant harm to U.S. investors, consumers, or economic interests. That approach has been a welcome contrast to some countries in Asia and Europe that have adopted more restrictive regulations of cryptocurrency markets. However, the rising number of crypto-friendly countries — or nations designing regulatory structures to attract and promote digital asset investment and activity — indicates it is time for the U.S. to take a more deliberate approach; the spread of crypto-friendly regulatory activity also provides the U.S. with a set of precedents and models from which to draw for a new domestic regulatory and legislative architecture. The gaps, overlaps, and ambiguities in today’s
U.S. digital asset regulatory structure have created confusion, driven market activity elsewhere, and put the U.S. behind in the global digital asset movement. This paper lays out the need for clearer regulation, reviews the U.S. approach to date, identifies the areas where regulatory clarity is most needed, and draws on global precedents for lessons and characteristics to inform a new U.S. virtual currency regulatory framework.