In the last two weeks, U.S. policymakers have presented the American people with two distinct paths for digital assets. One leads to innovation and job growth, while the other is a dead-end street. Last week, the U.S. Securities and Exchange Commission (SEC) made it clear that they do not believe crypto should exist in America with their twin actions against Coinbase and Binance. Despite the lack of clarity in the current regulatory regime, the SEC has decided to regulate by enforcement.
Across the street from the SEC’s headquarters, Democrats and Republicans have made progress on a bill to institute crypto market structure rules. The discussion draft legislation takes from the bipartisan Jumpstart Our Business Startups (JOBS) Act to provide a way for token issuers to fundraise while maintaining investor protections. It would also allow firms to register with government agencies, as SEC Chairman Gary Gensler has claimed is possible.
John Rizzo, senior vice president of public affairs at Clyde Group, said, “The end game of the SEC’s regulation by enforcement spree is unclear and should give even those skeptical of crypto assets pause.” If the SEC is successful, crypto will just move elsewhere, beyond U.S. borders and the control of U.S. regulators.
For the U.S. to catch up with the rest of the world on crypto asset regulation, lawmakers need to make substantial progress on a crypto market structure bill. This would provide stabilizing clarity that would foster innovation while protecting consumers and investors.
The only rational way forward for this country is to end the crypto wars and reach a negotiated regulatory framework that provides clarity. Unfortunately, SEC Chairman Gary Gensler’s statement that the U.S. “doesn’t need” more digital currency may indicate that rationality may not prevail.