Vague, Contradictory Crypto Asset Regulations in the United States Risk Top-Tier Innovation to Faulter


The unclear and conflicting regulations on crypto assets are causing great dissension amongst the cryptocurrency companies operating in the United States. It is feared that unless these financial laws are amended and updated, there will be an exodus of highly talented individuals to countries where the regulations offer a friendlier climate to operate in.

Whilst always on the forefront of technology which has seen the setups by Silicon Valley being extremely successful whilst operating within the constituted climate, the same cannot be said of the introduction of blockchain technology in the US.

The SEC (US Securities Exchange) and CFTC (US Commodity Futures Trading Commission) are extremely vigilant of these platforms, which include unlicensed monetary dealings and unregistered securities trading. This added to the conflicting regulations, results in the cryptocurrency issuers, services provided and P2P traders are conflicting with the law without any just cause.

The government has been asked by Poloniex exchange owners, Circle, for US regulators to act with reason failing which people may tend to move towards areas where regulations are clearer. It is believed that this would not be beneficial to US trading.

The online crypto trading markets and digital crypto platforms have made a plea to the US to regulate in such a way to allow creativity amongst technologists and to allow operations on blockchains as opposed to the antiquated laws that were written for guarantees offered by companies and corporations.

The outcome of these regulations has seen cryptocurrency exchanges taking a precautionary view, knowing that any smallest transgression may result in a hefty fine or even closure from trading.

The Rest of The World Makes Hay Whilst America Sleeps

With the uncertainty abounding as to what makes a project’s token a utility, exchanges such as Poloniex have removed coins like DCR (Decred coin) – a digital currency – resulting in other countries taking advantage and seizing the opportunity to tokenize.

Advice From An Expert

Jose Mario Macedo who serves on numerous advisory boards, is a token economics expert and who has helped to develop the blockchain policy, pointed out that the SEC has an obligation to remove glaring financial misdemeanors incurred by the ICO (Initial Coin Offering) and not acting in the same manner towards the tokenized projects that are acting with the goodwill of the people in mind.

It is again the unclear definition in the US of what comprises a security token that has resulted in exchanges no longer operating on crypto assets to avoid being convicted by the SEC. Jose Maria Macedo went on to give the definition of crypto capital as a token which offers entry to something of worth. Crypto assets are described as tokens that do not offer a continuous flow of value. These descriptions, whilst appearing easy to understand, are not totally clear cut and US crypto companies are forced to tread wearily.

Crypto Leaders Address This Problem With The SEC

Fred Wilson, CEO of Union Square Ventures, highlighted that the policy of the SEC is going to have a detrimental effect and force trading and the crypto sector to move to Asia resulting in the technology sector having their headquarters in this region and not in the US.

Late in May, KIN founder Ted Living stated that his operation has launched Defendcryto.org and was setting aside an amount of $5 m with Coinbase to take on the SEC which he believes are stifling innovation. He has implored other crypto agencies to contribute to the cause as he believes that this amount is not sufficient to take on this huge challenge with the SEC. His wish is for the crypto industry to stand together rather than fight the cause silently.

The recent history of Kin which saw the company raise $100 million via an ICO, could result in a lack of support for this campaign but it is a general feeling that the crypto asset regulation needs to change before the US is left in the wake of those countries who have taken advantage of the evolution of digital currencies and it would take the US many years to catch up if not addressed immediately.

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