Regulatory Uncertainty Is A Major Theme On Token Summit As SEC Yet To Deliver Crypto Clarity
Regulatory Uncertainty Is A Major Theme On Token Summit
This year, regulatory uncertainty seems to certainly be one of the major concerns of all the people involved in the crypto market. The conference has several cases which showed just how much uncertainty there is right now in this emergent market.
One of the cases was about Kik. As you may have heard before, Kik would sue the U. S. Securities and Exchange Commission (SEC). Now, it looks like this will not happen anymore, according to Ted Livingston, the founder of the company. He talked about the issues during the Token Summit 2019, which happened in New York today.
This case began as the SEC affirmed that Kik, a messaging app backed by the giant Tencent, infringed the securities law by raising $150 million USD during an Initial Coin Offering (ICO). Ever since the problem started, the company has spent a lot of money in the case.
The Canadian company had originally promised to take legal action against the SEC, however, it seems like the company is increasingly diminishing its chances to actually go through with the idea.
Livingston affirmed that he would rather the SEC take any kind of action instead of just delaying the decision too much. The company has been spending a ton of money in court and the SEC is dragging its feet in order to move the case forward.
In fact, the regulatory uncertainty of the country has been a major topic of the conference. There is an endless discussion happening right now about whether new tokens created using the ERC20 standard or a similar one are actually securities or not. Are these tokens just selling access to these networks or are they ownership stakes? The discussion continues.
Jae Kwon, which works at Cosmos, for instance, affirmed that the regulators are making an effort in order to note the gaps in the regulation and work on them, but the truth is that innovation is always ahead of the regulators, so there is simply not a lot that can be done in this regard.
How To Overcome The Uncertainty? Will The Congress Help?
The fact is that the only way is to move forward despite all the possible problems and issues. Playing by the rules laid out by the regulators is certainly not something that will be very cheap for the companies, as we can see with Muneeb Ali, the CEO of Blockstack.
He went to the conference in order to explain how he filed for a Regulation A+ filing with the SEC and affirmed that this is basically a mini-Initial Public Offering (IPO). The cost of the process? Around 2 million USD. That’s right, that is how much is costed the company.
He affirmed that people could even consider his effort a donation to the industry, as it will make it easier for other companies to take the same approach at a much lower cost in the future if the path is already written for them.
There is also the question of the U. S. Congress. Many people are asking lawmakers to solve the problem that is happening with the regulation. Many members of the crypto world offered support for the Token Taxonomy Act, which was created by Darren Soto and Warren Davidson and could enable some kinds of cryptos not to be evaluated by the securities law.
More and more transactions are currently being done using cryptocurrencies, so it is obvious that they are important for the future and need regulation.
Ali affirmed that he knew that there was a legislative process happening at this time but that the crypto community would simply not be able to wait forever. He affirmed that he also could not conceive the idea of challenging the SEC in court as Kik did, which is why he decided that it was the right idea to move forward with the registration process.
Some people in the summit were not believing a lot in the potential of the government in solving the problems, though. Timothy Massad affirmed that many Democrats are very concerned with the idea of simply accepting the project because it could undermine the securities law, an important defense for the customers in the U. S.
Massad worked with the ex-U. S. President Barack Obama, as he helmed the Commodities Futures Trading Commission (CFTC) at the time. According to his “insider approach”, the crypto industry is different and needs a new approach, however, the politicians may not be eager with this idea, that is the truth.
This could bring several problems to the adoption of the law and the own crypto market changes all the time, so there is this other problem which has to be solved, too, if people just want the industry to grow and be more regulated at the same time.
The final problem here is that there is no simple definition and it is clear that neither the regulators nor the politicians in the United States are currently capable of tackling this problem. The law is not tailored for crypto.
In fact, the attorney Robert Rosenblum, which participated in the conference, affirmed that most cryptos are generally seen as securities but then, “so what”, he asked. Regulators simply need to be considerably more clear on how people will be able to buy the assets, especially when the trading markets are still being created.
According to him, only with a more experienced and well-functioning market people will really be able to create a better framework that will define the market.
How long will this take? Hopefully not too long as everybody knows that this slowness is torturing the market, as it simply cannot seem to grow at all.
Andreas Glarner, an attorney from Europe, affirmed that it seems to the Europeans that the whole American market is confused. If they take too long to wake up and embrace innovation, they may end up losing their ability to participate in the industry effectively.