Many crypto industry insiders have been calling on U.S. lawmakers and regulators to establish clear regulations for the industry, warning that a failure to do so will only increase the flood of innovators and entrepreneurs moving out of the U.S. to more crypto-friendly jurisdictions.
A live committee hearing on April 27 titled "The Future of Digital Assets: Identifying the Regulatory Gaps in Digital Asset Market Structure" explored discrepancies facing the industry.
“Without objection, all members will have five legislative days within which to submit extraneous materials to the Chair for inclusion in the record,” Subcommittee Chairman Rep. J. French Hill (R-Ark.), said in his opening statement. “We've got a unique opportunity as members of this subcommittee to be on the cutting edge of crafting an effective functional regulatory system for the digital assets ecosystem. At this very moment, chair Johnson and members of the House Agriculture Committee are also holding a similar hearing discussing this same issue. That means that more than 40 members of the U.S. House have an opportunity to work together to ensure that our regulatory framework embodies the key principles of the same activity, same risk, same regulation. Moreover, we'll be holding a joint hearing next month of the House Agriculture Committee to explore these issues together.”
According to Hill, the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) disagree on the classification of many digital assets, which is unworkable for entrepreneurs and consumers. First, the agencies need direction from congress. Second, the current disclosure regime does not produce information that a reasonable consumer would need to know before considering the purchase of a digital asset. The information that's relevant to the purchaser of a digital asset is different from the information that's relevant when an investor considers purchasing a stock of a public company. Third, it needs to be explored whether digital asset trading platforms perfectly fit under existing laws and regulations and the rules applicable to digital asset trading platforms.
One of the first to testify on the subject was Marta Belcher, president and chair of Filecoin Foundation, one of many organizations working on a cryptocurrency called Filecoin.
“While this hearing is in the Committee on Financial Services, I want to emphasize today that cryptocurrency is about so much more than finance,” Belcher said. "Cryptocurrency is already creating a better internet providing an alternative to big tech that puts people in control of their own data. This technology is also preserving some of the world's most important information, including government data, evidence of human rights abuses and critical scientific datasets.”
Richie Lai, co-founder and CEO of Bittrex, a Seattle-based cryptocurrency exchange, announced on March 31 that due to the regulatory and economic climate in the U.S., the company is shutting down its domestic operations.
"Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape," Lai said in a post on the company website.
Changpeng Zhao, the Canadian CEO and founder of Binance, has argued that regulation helps bring trust and growth to the crypto industry.
“Regulatory clarity is needed ASAP," Zhao Tweeted. "I have said this before and will say it again: the best form of user protection is globally consistent, risk-based regulation. Outright bans will just lead to users operating in the shadows, at their own risk, and without any safety net…User protection and market integrity are enhanced when lawmakers and regulators expand the scope of permissible activities. We have seen this in many other industries: tradfi, health care, pharma, internet, content, etc."
