Over 50 stakeholders from the cryptocurrency and finance industries this week discussed with U.S. lawmakers in Washington to talk the future of blockchain controls in the country.
The meeting which was held at Capitol Hill at the bidding of Rep. Warren Davidson (R-OH), saw attendance from the representatives of industry heavyweights such as Coinbase, Kraken, Nasdaq, Andreesen, Horowitz, State Street, ConsenSys, Fidelity and the U.S Chamber of Commerce. The message from most of the attendees was similar: regulators should step in to make more precision to crypto regulations otherwise blockchain innovators will be driven to exit the country.
Based on source’s summary of the summit, the panelists disapproved the Securities and Exchange Commission (SEC) from stating a new asset class such as cryptocurrencies after taking a hint from the results of a 72-year old case. The 1946 Supreme Court decision SEC v. Howey Co. maintained that the offer of a land sales and services would serve as “investment contracts.” The SEC uses the same “Howey Test” to cryptocurrency distributions and initial coin offerings (ICOs), indicating of them as securities in the eyes of the law.
Hence, young startups in the U.s waiting to introduce blockchain assets remain disordered regarding their compliance status. Many of them wish to release utility tokens, cryptocurrencies that would be used to trade assets within a centralized or decentralized platform. They do not hold a speck of adoption a security token should have, according to an industry representative.
As doubt grows, the SEC has also increased its ban against some domestic crypto firms. Even though some of them are obviously fake, many small firms get fined for smaller violations, including not registering with the SEC. The tangible steps against crypto firms that are already existing in the gray areas could motivate them to move to foreign areas that are friendly.
“If the rules are unclear, unwritten, or unknown it’s not appropriate to punish people for making the wrong guess,” said David Forman, the chief legal officer at Fidelity Investments.
Given that bitcoin and other currencies are borderless and can be used and released anywhere, transferring crypto-business abroad is not so challenging, explained ConsenSys’ Joyce Lai to lawmakers. Jesse Powell, CEO of cryptocurrency exchange Kraken, smoothed the debate by comparing what the U.S. is losing against what the rest of the world is benefiting.
“Foreign companies [can] outraise their U.S. competitors and often whoever raises the most money is who wins,” Powell said. “Not only are U.S. companies not able to raise enough to compete globally, [but] U.S. investors also are not able to invest in these global companies.”
Rep. Davidson guaranteed that the industry’s opinion will urge them to make a friendly cryptocurrency regulatory framework.
“Legitimate players in the industry have a desire for some sort of certainty so we can prevent and prosecute fraud,” he said. “I’m confident we can move forward and make this a flourishing market in the U.S. It’s imperative for us to do, we did it well with the internet.”
Rep. Tom Emmer (R-MN), who has launched several multiple blockchain bills in the legislature this month, feared that they were short of time to make a conventional regulation practice. His Democratic colleague, Darren Soto (D-FL), approved.
He noted, “I’m sensing we may need an entirely new category that treats this as a new asset so that we’re not trying to squeeze a square peg into a round hole,” adding that, “There needs to be some streamlining based on the definitions of digital assets.”