It seems that American crypto enthusiasts have run out of patience with respect to a clearly unregulated legislative base. More than 50 industry leaders gathered at the invitation of Congressman Warren Davidson to discuss this issue. The roundtable was attended by representatives of Nasdaq, Fidelity, Andreessen Horowitz, State Street, and the U.S. Chamber of Commerce. Why are industry representatives so bellicose towards the Congress and will they succeed in meeting their demands? We sorted it out in our article.
What Does the Crypto Industry Expect from the Legislation?
The main and only issue on the agenda of the meeting was the problem of the legitimization of cryptocurrency assets. "We all want honest and orderly markets and we want the regulators to ensure this," said Mike Lempres, chief legal and risk officer at Coinbase in San Francisco. "It's not necessary to do it the way it was done in the past, and we need to be open to innovations."
Most of the discontent was about the idea of applying a 72-year-old law on securities to digital assets. According to SEC Chairman John Clay, the Howey test has still not lost its relevance and there is no need to update the standards.
Meanwhile, the initiative group of crypto enthusiasts told a whole series of stories in which companies could not determine exactly whether their products were still securities or commodities. According to forum participants, this kind of legislative uncertainty can create a "frightening effect" that can become fatal for innovation in the United States.
"If the rules are unclear, unwritten, or unknown, it is impractical to punish people for misinterpreting the legislation," said David Forman, the chief legal officer of Fidelity Investments.
Since Bitcoin and most other cryptocurrencies do not depend on the government (with the exception of national projects), the project founders can easily change the location of their office and choose more crypto friendly jurisdictions abroad.
"There is fierce competition around the world for providing the best conditions for the crypto industry, but the United States still has the opportunity to become a leader in this field," said Joyce Lai, a lawyer with the software company ConsenSys.
The co-founder and CEO of the Kraken crypto exchange Jesse Powell stressed the advantages of being able to freely attract capital.
"Foreign companies can outperform their competitors in the U.S., and often, the one who receives the most money wins," Powell said. "It is not just that U.S. companies cannot increase their competitive advantages at the global level. Now, even American investors cannot invest in these international companies."
In the end, despite very lengthy discussions and various statements, Warren Davidson said that the bill on cryptocurrencies was still "raw" and the discussion was only "consultative."
"Legitimate players in the crypto industry want some kind of certainty so that we can prevent and prosecute fraud," Davidson said. "I am confident that we will be able to move forward and make this market prosperous in the United States. It is very important for us."
What Can the Categorical Nature of Congress Lead To?
Meanwhile, such short-sighted behavior of the U.S. Congress can lead to an outflow of innovative companies from the country, as has already happened, for example, with China. Many successful cryptocurrency startups left the country's jurisdiction due to the adoption of draconian laws in relation to the entire industry. Is it necessary then for America to persist in its desire to use old laws in relation to new phenomena or not?
According to Gleb Kostarev, the official representative of the Binance crypto exchange in Russia, Congress will most likely take into consideration the message of the U.S. crypto industry participants. "As we are already observing how many cryptocurrency startups are moving their headquarters or registering in more favorable jurisdictions than the U.S. For example, in Malta or in Asian countries. And the number of such jurisdictions continues to grow. In particular, the other day, the Singapore regulators announced that they plan to continue the process of integrating cryptocurrencies into their economy," as Gleb Kostarev told DeCenter.
In addition, historically, the voice of representatives of American entrepreneurship is of great importance in U.S. government authorities. "Personally, I do not see anything illegal in defending citizens' economic interests by legitimately warning the representatives of the authorities about their intention to transfer their blockchain business to a country with a more favorable legal environment. It is difficult to foresee the reaction of the Congress, but I think the following will be the outcome of this situation. Most likely, the U.S. legislature will adopt a formal narrow profile law that regulates only certain legal relationships in the blockchain sector, but this will not be a comprehensive qualitative normative act. As with the law in Russia, Americans do not want to be pioneers in this area and also want to take the position of a ‘successful second’ country, that is, to study the experience of states that are already implementing blockchain technologies, and apply exclusively positive experience on the territory of your country by taking into account their mistakes. Now, as a rule, small countries such as Singapore, Estonia, Sweden, and Belarus that are not as much involved in global economic processes as large states and can afford experiments with new technologies are the ones who reign supreme in the blockchain industry. I do not presume to say that their example of regulation of the blockchain sector is extremely positive, however, constant experiments will allow these states to take at least temporary leadership in the use of blockchain technologies, which, of course, will have a favorable effect on their economic growth," as said by the administrator of the Crypto Lawyer community Alexander Kozlov.