Crypto leaders press Congress for action

  • By Tom Cleveland

  • November 14, 2018
  • 1:30 am BST

It is a rare day when business leaders actually ask government officials for more regulation, but industry leaders in the cryptocurrency field are after the legitimacy that regulatory oversight will bring to their ongoing efforts. The crypto industry is no longer an “infant child”. With its market cap exceeding $200 billion for its coin products alone, not to mention investments in exchanges and mining operations, crypto has definitely reached the “Big Time”, so to speak. The Wild West atmosphere needs to recede, to be replaced by reasonable operating standards, meaningful disclosures, and, yes, a good dose of regulatory compliance and the credibility it affords.

Recent surveys suggest that 88% of crypto exchanges would welcome regulatory oversight, but government legislation is woefully behind the times and needs a major overhaul to become up to date with the intricacies of cryptocurrencies. In that vein, a group of crypto industry leaders, along with Wall Street and venture capital firms, met with U.S. lawmakers, and, as reported, “overwhelmingly asked for more clarity around existing regulation.”

Rep. Warren Davidson, R-Ohio, who is sponsoring a bill that will bring clarification to related crypto issues, conducted a roundtable discussion with over fifty industry  participants in attendance. One major concern of attendees was, without more legal specificity, innovation will leave the U.S. for more inviting destinations. Joyce Lai, a lawyer at blockchain software technology company Consensys, summed it up by saying, “The competition around the world is real. But there’s still time and opportunity for the U.S. to be a leader here.”

Uncertainty of legal consequences can stifle innovation. David Forman, chief legal officer at Fidelity Investments, added that, “If the rules are unclear, unwritten, or unknown it’s not appropriate to punish people for making the wrong guess.” The major issue in this area is that the SEC is relying on 72-yearold statutes to guide its way through the modern digital morass. Mike Lempres, chief policy officer at San Francisco-based Coinbase, emphasized that, “We all want a 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.”

The SEC has recently been cracking down hard on what it interprets as violations under existing security laws, specifically in the area of Initial Coin Offerings (ICOs). According to recent estimates, over $12 billion has been raised this year alone for ICOs, a record setting pace. Jesse Powell, co-founder and CEO of crypto exchange Kraken, noted that, “Foreign companies are able to outraise their U.S. competitors and often whoever raises the most money is who wins. Not only are U.S. companies not able to raise enough to compete globally, U.S. investors are not able to invest in these global companies.”

There were several other Congressmen in attendance, suggesting that a bipartisan bill could be a possibility, but after four hours of discussion, Rep. Davidson admitted that there was much more work to be done. One of his Republican colleagues, Tom Emmer, R-Minn., remarked: “We need to get moving on this now, there’s no time for delay.”