America’s Crypto Industry Needs A Clear Rule Book

✓ Support innovation, ✓ protect investors, ✓ provide regulatory clarity, and ✓ secure U.S. leadership

SEC Headquarters in Washington, D.C.

For the past decade, the United States has led the world in crypto innovation. The U.S. ranks among the top nations in the world for our number of crypto holders, and America is home to the world’s most innovative crypto companies.

That leadership has given Americans unmatched access to new technology that expands opportunity. Crypto has provided the underbanked with a method to send and receive funds. It’s allowed for decentralized borrowing and lending to generate wealth, and it’s drastically reduced the cost and time for anyone to send cross-border remittances. Not to mention the many thousands of employees the industry has hired in the United States.

And more and more Americans are getting interested in crypto. Public opinion conducted by Morning Consult and commissioned by our organization shows that 18–45 year old Democratic voters are among crypto’s biggest supporters:

But American leadership in crypto faces a serious threat: a regulatory gray area and a lack of action from government policymakers to create clear rules of the road.

Right now, crypto regulation is shared between an alphabet soup of agencies across the federal government — the SEC, CFTC, IRS, and FinCEN in the Treasury Department. Every agency wants a piece of the crypto industry, but instead of creating new rules to shape the industry, regulators have tried to apply old financial regulations to new digital assets.

That’s resulted in legal uncertainty for American companies, and it’s created room for other nations to challenge the U.S.’s role as a global industry leader. Singapore has worked to become a global center for the cryptocurrency industry. The UK and France moved quickly to enact regulations that encourage innovation while protecting consumers.

With American primacy in the crypto industry at stake, regulators should keep three things in mind.

First, government should work with industry and consumer protection groups to understand what needs to be done to support innovation while protecting individual investors. Rather than establishing cooperation and dialogue with blockchain companies, the SEC has engaged in a litigation campaign with misguided lawsuits and threats against cryptocurrency exchanges and investment platforms.

The risk here is obvious. Companies want legal and regulatory certainty that reassures investors and crypto holders. If they don’t get it in the United States, packing up and moving to the world’s next crypto capital is as easy as logging into a computer from a new location.

Second, rules should define digital assets and establish a new regulatory framework for this new class of products. All financial products have a prescribed set of rules, and agencies to report to in order to protect investors, businesses, and markets. Cryptocurrency shouldn’t be any different.

Third, and most concerning, are the economic security implications of losing American leadership in blockchain innovation. The U.S. is in danger of losing the global race to become the hub for a technology that will shape the course of our financial system, as well as industries from healthcare to real estate to personal data protection.

In Congress, lawmakers have held multiple hearings over the past couple of months to gain insight into the crypto industry and explore what legislative solutions might support the nascent industry. Crypto’s reception has been generally positive.

Chairing a recent hearing, Rep. Ann Kuster (D-N.H.) expressed support for cryptocurrency for its potential “to support unbanked citizens in countries with weak or corrupt financial institutions.” And Rep. Darren Soto (D-Fla.) said the technology should be protected for its ability to make “internet transactions more secure.”

As we develop what will be the foundation of U.S. crypto regulations, policymakers should prioritize promoting blockchain innovation within our borders — which also protecting consumers.

Crypto’s original hurdle was to get past the fear of the unknown. But the American public doesn’t see crypto as an unknown anymore. It’s time for regulators to catch up and provide the clear and established regulatory framework the industry needs, before it leaves for greener pastures.

The Chamber of Progress (progresschamber.org) is a new center-left tech industry policy coalition promoting technology’s progressive future. We work to ensure that all Americans benefit from technological leaps, and that the tech industry operates responsibly and fairly.

Our work is supported by our corporate partners, but our partners do not sit on our board of directors and do not have a vote on or veto over our positions. We do not speak for individual partner companies and remain true to our stated principles even when our partners disagree.

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Adam Kovacevich

Adam Kovacevich

CEO and Founder, Chamber of Progress. Democratic tech industry policy executive. Formerly Google, Lime, Capitol Hill, Dem campaigns.