That’s the subject of my latest Bloomberg column, and here’s part one of the argument, which focuses on a bill that just passed the House but may stall in the Senate:
About policy details: Is this a good loan? Mostly, yes. Without a coherent regulatory framework, the US crypto industry will not be able to compete with other countries. That hurts American innovation, encourages other entrepreneurs to take their businesses abroad, and ultimately could reduce the integration of crypto with the mainstream financial infrastructure, which would put the US financial sector at a disadvantage.
The bill has an important provision to require crypto infrastructure to be sufficiently decentralized, at least if that infrastructure is to fall under the jurisdiction of the CFTC rather than the SEC. These decentralized crypto infrastructures, which can include Bitcoin and the Ethereum network, are considered “digital assets,” and are given a lot of freedom. Such assets are not like shares of Apple stock, where the buyer expects a very specific kind of corporate responsibility and predictable financial reporting. The bill therefore stipulates that, for most crypto-assets, the initial issuance must involve strict disclosure and regulation, with the role of the SEC. Over time, as the blockchain for such assets becomes more developed and well established, the regulation would be relaxed.
Any proposal for such rules will involve some ambiguity and be easy to be gamed (companies) or abused (regulators). What is considered “adequate” decentralization, for example, is ultimately a subjective question. Still, this bill seems like a logical starting point for crypto regulation.
Another exception to these regulations is of course the absolute choice of control, which is part of the current situation. And here is Alex’s latest post about crypto regulation.
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