While the U.S. provides cryptocurrency innovators with the best access to funding, doing business there is a murky mess of half-baked rules with no transparent guidelines from financial regulators, three industry lobbyists said Tuesday.
Lobbyists who work in Washington, D.C. told Zenger News’s Future of Digital Assets conference on Tuesday that any guidance available is not coming from financial regulators, but rather from the courts imposing enforcement actions after the event.
The malaise of the FTX scandal, which could see its founder Sam Bankman Fried spending many years in prison, still permeates Washington, said Cody Carbone, VP of policy at the Chamber of Digital Commerce.
“In the absence of regulations in the U.S., the courts have had to act. So what we’re seeing is a lot of reactionary proposals and reactionary enforcement actions,” he said.
Katherine Wu, who lobbies on behalf of the Crypto Council for Innovation, said this kind of after-the-event enforcement as non-productive.
“The only real piece of guidance is legacy one-off enforcement actions. When builders have to become enforcement actors, it takes a long time,” she said.
Carbone said he sees what other countries are doing and would like to see the U.S. take a more proactive stance.
“I love what the U.K. is doing and I love what the EU is doing. Whether we agree with their rules or not, they are providing rules and providing clarity and that makes a developer’s or founder’s job easier.”
Is Crypto Funding Terrorism?
While questions are being raised in Congress about the SEC’s role in regulating cryptocurrency, headlines are starting to build over the use of digital assets in funding Hamas. These are untrue and counterproductive in the quest for transparent regulation, said Carbone.
“The anti-crypto army – all they have to say is ‘Hamas is using crypto’ to build a case against us. We’re always running uphill,” he said.
The reality, he said, is that only 0.24% of cryptocurrency is used in illicit finance, while cash is 2%-5%. “But when we’re talking about crypto all anyone sees is the negative headlines and it becomes the only talking point in D.C.”
Bitcoin ETF Approval Inches Closer
While U.S. regulators have taken an arms-length approach to cryptocurrency regulation, they are expected to approve a Bitcoin (CRYPTO: BTC) ETF in the coming months. Nine asset management companies, including BlackRock and Valkyrie, await approval from the SEC and hope for the green light in early 2024.
Carbone remains skeptical. “I’m bearish because I’ve been dealing with the SEC for a decade. I’ve never seen Gary Gensler take any advice from the crypto industry, and now there’s institutional interest, he appears to be doubling down.”
Produced in association with Benzinga
