The heads of three high-profile cryptocurrency companies say the U.S. lacks a clear set of regulations for their industry, which is why most trading happens offshore.
The remarks came late Wednesday (Nov. 9) in a Twitter exchange with Sen. Elizabeth Warren (D-MA) after she said that the collapse of crypto trading platform FTX this week “shows how much of the industry appears to be smoke and mirrors.”
Warren also said she would push the Securities and Exchange Commission to do more to protect consumers and got pushback from the likes of Coinbase CEO Brian Armstrong, who said that FTX was a foreign exchange and thus not regulated by the SEC.
https://t.co/0HxlRiI6Sy was an offshore exchange not regulated by the SEC.
The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore.
Punishing US companies for this makes no sense.
— Brian Armstrong (@brian_armstrong) November 10, 2022
“The problem is that the SEC failed to create regulatory clarity here in the US, so many American investors (and 95% of trading activity) went offshore,” he wrote. “Punishing U.S. companies for this makes no sense.”
Ripple CEO Brad Garlinghouse added that companies have no guidance on how to operate in the U.S., saying firms needed a system that fosters trust and transparency. He used Singapore’s regulatory framework as an example.
“They can appropriately regulate crypto b/c they’ve done the work to define what ‘good’ looks like, and know all tokens aren’t securities (despite what Chair Gensler insists),” he wrote.
Added Circle CEO and co-founder Jeremy Allaire: “The lack of a clear and sound regulatory framework for US crypto markets has left people exposed to the supervisory powers of the Bahamas and who knows where for others.”
I am with Brian on this. The lack of a clear and sound regulatory framework for US crypto markets has left people exposed to the supervisory powers of the Bahamas and who knows where for others. Please @SenWarren help write sound policy, don’t punt this merely to enforcement. https://t.co/VSk8DXuqSG
— Jeremy Allaire (@jerallaire) November 10, 2022
He called on Warren to “help write sound policy” and not “punt this merely to enforcement.”
It’s not just crypto companies that feel this way. A PYMNTS survey found that 52% of traditional financial firms who are weighing blockchain and crypto adoptions said unclear regulation was their chief concern.
“The lack of regulatory clarity is one of the reasons that institutions are hesitant to interact with cryptocurrency,” Caitlin Barnett, director of regulation and compliance at blockchain data firm Chainalysis, said in an interview with PYMNTS.
“The transition from an unregulated to a regulated market can be a difficult and sometimes painful one to navigate, for sure, but it’s obviously a necessary step that will bring greater safety to consumers and greater certainty to investors — in particular institutional investors — and helps to facilitate their entry into this space.”
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