The SECs Covert Demolition Job on the Blockchain Industry: Threats to Innovation and Capital Formation

The SEC’s Covert Demolition Job on the Blockchain Industry

The blockchain industry has been plagued by scammers and fraudsters, causing collapses of major players in recent years. However, progress in the industry is being threatened by the U.S. Securities and Exchange Commission (SEC) and its covert actions to protect its own interests. The SEC is behaving like a merit-based regulator, deciding which technologies should exist in the United States. This is a departure from its mandate to be technology neutral and establish disclosure frameworks for issuers. The SEC’s actions are harmful to U.S. investors, pushing startups offshore and impeding capital formation.

Main Breakdowns:

The SEC is acting as an arbiter of which technologies should exist in the U.S.
Startups are moving offshore due to regulatory uncertainty.
The SEC is regulating via enforcement and rulemaking instead of working with Congress.
The SEC is implementing obscure accounting rules that hinder custody banks’ involvement in digital assets.
The SEC is pressuring state trust custodians, targeting companies like Coinbase.

If the SEC continues its current path, the U.S. will hinder the growth of the digital asset industry. However, other countries like the E.U., U.K., Singapore, and Australia have passed regulatory frameworks for digital assets. Congress has recognized the importance of blockchain technology and has proposed legislation to protect it. Market structure and stablecoin issuance bills could provide clarity and allow banks and broker-dealers to participate in the digital asset market.

Hot Take:

The SEC’s actions are hindering the growth and innovation of the blockchain industry in the United States. By acting as the arbiter of which technologies should exist, the SEC is stifling competition and driving startups offshore. If this continues, the U.S. will miss out on the economic benefits of the digital asset industry, while other countries thrive. It’s crucial for Congress to step in and pass legislation to provide clarity and allow for the responsible growth of the industry.