#316—The U.S. war on crypto comes to a close
Also, key crypto policy issues for the new administration
Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.
This week:
The U.S. war on crypto comes to a close
Key policy issues for a Trump administration (Greg Kidd)
Stuff happens
1. The U.S. war on crypto comes to a close
Under Gary Gensler (and his predecessor Jay Clatyon), the SEC has more or less gone after (or at least served a Wells Notice to) most of the biggest crypto players in the industry—Ripple, Coinbase, Kraken, Binance, Uniswap Labs, even Robinhood, among others.
This approach—regulation by enforcement—has had a chilling effect on the industry’s domestic development, pushing investment and innovation abroad, all while maintaining a level of regulatory ambiguity.
Is Ethereum a security? For whatever reason, the SEC has always refused to answer such basic questions.
It’s an approach that, according to judges and academics, hasn’t been all that effective either.
Here’s the WSJ (via Margaret Slemmer):
“The agency’s decision to oversee this billion dollar industry through litigation—case by case, coin by coin, court after court—is probably not an efficient way to proceed, and it risks inconsistent results,” U.S. District Judge Amy Berman Jackson in Washington, D.C., wrote this summer when she dismissed a portion of the SEC’s claims against Binance.
Some experts say the SEC wasted valuable time by positioning itself like a beat cop and should have rallied around a set of new rules that could have produced more immediate protections for investors and consumers. “It wasn’t the right approach,” said Sarah Hammer, executive director at the University of Pennsylvania’s Wharton School.
But that era is now coming to a close.
The WSJ:
Trump’s return to the White House will mean a new era for crypto—with fewer government hurdles. The president-elect, shedding previous skepticism of crypto, has pledged support for the digital-asset industry, whose leaders embraced his campaign. He also wants to curb the independence of agencies such as the SEC and the Federal Reserve.
The next SEC chairman is likely to offer crypto exchanges a favorable settlement. Lawyers considered as candidates to succeed Gensler have positioned themselves as critics of his litigation. One who has been considered, former SEC General Counsel Robert Stebbins, said the agency should pause most of its crypto lawsuits while clearing a path for the firms to do business without the overhang of litigation. “To the extent there are no fraud claims involved, my sense is the commission would be likely to dismiss those cases in the future,” Stebbins said.
…
Dismantling the litigation would spell the end of an adversarial approach to crypto that began in 2017, during Trump’s first term, when the market was flush with new digital assets that were being sold to the public without any restrictions. Trump was critical of crypto during his earlier tenure, once saying its value was “based on thin air.”
2. Key policy issues for a Trump administration (Greg Kidd)
The WSJ asked crypto investors including Hard Yaka co-founder Greg Kidd what they saw as key policy issues for the new administration:
Greg Kidd, co-founder and chief executive at Hard Yaka: “For the industry to move forward, the key issue is clarity. We need practical answers to fundamental questions—what is a security, a commodity, a derivative, and a currency? We need to know who regulates what and why. If something has to be registered, how is that done? And if we want to see the kind of innovation driven by nimble startups in money, finance, and payments as we have in tech, we need federal pre-emption where possible over a patchwork of state rules.”
…
Derek Edws, managing partner at Collab+Currency: “Over the coming year, we’re optimistic that the blockchain industry can start to receive precise regulatory frameworks for all aspects of the stablecoin industry, including transparent reserve requirements for issuers, disclosure and reporting standards, and other mechanisms by which to support a growing consumer demand for U.S. dollars issued on blockchains.”