Writing on CNBC, Harold Ford, a former Democratic congressman and former member of the House Financial Services Committee, said the encryption industry and dozens of digital asset-related applications are the next sources of innovation in the U.S. economy. In the article, he also said what is really needed is a clear regulatory framework at the federal level that gives developers more confidence to move forward. He thinks the Securities and Exchange Commission now has an opportunity to take the lead on regulation that works with the industry, rather than on the opposite side.
The SEC should develop forward-looking provisions to promote innovation and work closely with Congressional and industry stakeholders. Referring to a congressional hearing in July on Facebook’s Libra and cryptocurrency regulation, he argued that some in Congress were too to attack the industry.
As for the regulation of cryptocurrencies, he argues that the current situation is a patchwork of several federal agencies, including the Commodity Futures Trading Commission (CFTC), the Internal Revenue Service (IRS) and the Financial Crimes Enforcement Network (FinCEN), the Securities and Exchange Commission (SEC), but lacks an overall regulatory framework. In this case, the SEC received the most attention. The agency’s attempt to unilaterally apply securities law to this new area of innovation has made investing in the United States more uncertain and more expensive to develop. Although the SEC released the Digital Asset Investment Contract Analysis Framework in April, it claims the non-binding guidelines represent employees’ views only, not SEC rules, rules or statements.
This, on the contrary, creates more uncertainty. He thinks the SEC is likely to be killing innovation. For decades, U.S. companies have been trying to develop their products to fully comply with evolving rules. Such non-binding guidance would only add to the confusion, as it would show that the SEC is regulating without a clear direction. This lack of transparency has, in fact, hurt American innovation.
“The SEC’s position will lead to small companies moving outside the United States,” a legal expert said. He concluded by saying that the SEC now had an opportunity to take the lead in working with industry regulation, rather than on its opposite side. Otherwise, the U.S. will lag behind other countries in attracting encryption-related businesses.