The last couple of weeks and even months have seen crypto industry experts in the U.S. call for clearer regulations. Now, it seems as if Congress is also pushing the Securities and Exchange Commission (SEC) for the same.
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You’ve Got Mail
According to CNBC, SEC Chairman Jay Clayton received a letter from some members of the House of Representatives requesting feedback on the authority’s plans for regulating the crypto industry. The letter, which was signed by over a dozen politicians, stated:
It is important that all policy makers work toward developing clearer guidelines between those digital tokens that are securities, and those that are not, through better articulation of SEC policy, and, ultimately, through formal guidance or legislation.
The SEC received another letter last week written by both crypto and non-crypto industry experts cautioning the commission to research regulations before applying them. This letter also added that the SEC shouldn’t rely on old methods for this new technology.
While Bitcoin and Ether are seen as commodities, most new tokens are viewed as securities thanks to the seven-decades-old Howey Test. Clayton has said that there will be no updates to its outdated decision-making process. However, legislation can be changed at the request of Congress, which could be what this latest letter is hinting at.
The way forward seems to be a collaboration between lawmakers, regulatory authorities, and cryptocurrency experts. Tuesday saw the first step to this with a roundtable discussion held in Washington. While there, Coinbase’s Mike Lempres said:
We all want fair and orderly markets, we want all the same things regulators do. It doesn’t have to be done in the same way it was done in the past, and we need to be open to that.
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Congress also does not agree with the regulation-through-punishment approach. This could refer to the SEC cracking its whip on platforms not adhering to some of its previously discussed guidelines like registering with the commission. The letter explained:
We are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.
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A result of murky regulations could be that businesses could look elsewhere to develop their platforms, specifically places that have clearer guidelines. This also applies to foreign companies hoping to expand to the U.S., like Binance and Bitmora. The exchanges rather opted to open up shop in crypto-friendly Malta.
The Congressional letter stated:
Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere. We believe that the SEC could do more to clarify its position.
It also asked the SEC to explain certain processes such as how it determines whether or not a token is a security and whether these processes are both specific to digital tokens as well as whether they are determined on a token-by-token basis. It also suggested that the SEC develop a Frequently Asked Questions (FAQs) guide as a way to help participants understand what is expected of them.
Signatories on the letter include Rep. Tom Emmer, who recently drafted three laws aimed at supporting cryptocurrencies and blockchain technology. It was also signed by Rep. Warren Davidson, who organized Tuesday’s roundtable discussion.
Do you think that the SEC will change their processes based on this latest letter’s requests? Let us know in the comments below!
Images courtesy of Pixabay and Shutterstock.
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