Blockchain Regulatory Reform Initiative: Who is Fighting for Better Regulation?

As Kik publicly challenges the SEC's 73-year-old securities regulatory framework, some influential companies, associations, and individuals have also begun to express dissatisfaction with the current Blockchain regulations in the United States. This article will introduce these important forces advocating for regulatory reform in alphabetical order, including their main viewpoints and demands.

Andreessen Horowitz Fund (A16Z)

Katie Haun, a partner at A16Z Crypto Fund, believes that the Kik case may have significant implications for the clarification of cryptocurrency regulation. She listed several advantages supporting the Kik case and pointed out that some well-known venture capital firms have been publicly and behind the scenes advocating for the modernization of existing securities regulations to better accommodate Blockchain technology.

Blockchain Association

An industry organization based in Washington, dedicated to promoting Blockchain and educating decision-makers. The board members of the association include well-known institutions such as Coinbase and Circle. They recently took over the "Defend Crypto" initiative launched by Kik and spoke candidly while criticizing the SEC.

Main appeal:

• Blockchain policies should be generated through an open decision-making or legislative process.
• Congress needs to maintain an open attitude towards understanding cryptocurrency.
• The Kik case has a significant impact on the open Blockchain ecosystem.
• The SEC's guidance raises more questions than it answers.

Members of Congress Send Letter to the White House

In May 2019, several independent lawmakers jointly sent a letter to the Director of the White House National Economic Council, requesting:

• Hold a Blockchain technology forum to hear the opinions of stakeholders.
• Incorporate Blockchain technology into the management plan

Members of Congress Letter to SEC Chairman

In September 2018, several members of the House of Representatives jointly wrote to the SEC chairman, requesting clarification:

• When is a token issuance considered a securities issuance
• Can a token originally used for securities sales be transformed into a non-security?
• What tools can the SEC use to provide more specific guidance for innovators?

Congressional Blockchain Core Group

Composed of members from both parties, they believe in the future of Blockchain and argue for a non-interventionist regulatory approach. The group has proposed three bills:

1. "Resolution Supporting Digital Currency and Blockchain" Request the U.S. government:

• Prioritize the development of Blockchain technology
• Create an environment for the U.S. private sector to lead innovation
• Build a supportive regulatory framework
• Avoid inappropriate restrictions
• Supports an easy, consistent, and simple legal environment

2. "Blockchain Regulatory Certainty Act" Entities on the blockchain that do not control customer funds are not required to register as money transmitters.

3. "Taxpayer Forked Asset Safe Harbor Act" Provide a temporary safe harbor for taxing hard forks.

Digital Chamber of Commerce

Call on the US government to formulate a national blockchain strategy, main demands:

• Clarify policies and regulatory requirements before enforcement
• Preventing the patchwork of regulations
• Establish an official agency for coordinating blockchain strategy

Circle

CEO Jeremy Allaire stated that US cryptocurrency policy needs to change. Main points:

• Disagree to generally regard cryptocurrencies as securities
• US regulators are creating an environment of uncertainty
• Stop using 20th-century laws to regulate 21st-century technology
• Many token projects do not meet the key elements of the Howey test.
• Disappointed by the consequences of the current guidelines

Token Center

Regulatory agencies should avoid suppressing innovations that do not meet the Howey Test, such as highly decentralized cryptocurrencies, sidechains, etc.

Kuli Law Firm

Partner Nancy Wojtas hinted that the SEC may not be the right agency to regulate cryptocurrency.

"Defend Cryptocurrency" Fund

Managed by the Blockchain Association, dedicated to helping more projects defend cryptocurrency.

Electronic Frontier Foundation

Opposition to the SEC's ruling against the founder of EtherDelta, arguing that it violates freedom of speech. Main points:

• Computer code is protected speech under the Constitution.
• Individuals involved in the development of protocols, mining, etc., should not be responsible for the operation of the securities exchange.
• The current regulation by the SEC may hinder innovation.

Christopher Giancarlo

The outgoing CFTC chairman supports a gradual regulatory approach. Key points:

• "Harmless" regulation is the correct approach to distributed ledger technology.
• Support re-evaluating the existing regulatory framework
• You cannot confine the technology spirit in a cage.
• Regulatory agencies should participate rather than overlook the development of cryptocurrency.

Global Digital Finance Association

Committed to building asset custody standards, promoting industry compliance and consumer protection.

Kik

Challenging the SEC through its case. Main appeal:

• Abandon Hawwei Test
• Do not regulate cryptocurrency
• Allow innovation through token models

Kraken

Oppose applying the securities law regulatory framework to cryptocurrency exchanges. Main points:

• It is necessary to distinguish between crypto assets that comply with securities laws and crypto assets for payment purposes.
• Clearly define the positioning of the exchange operating as a trustee.
• Implementing a securities law regulatory framework for exchanges is neither necessary nor appropriate.

Libra / Facebook

Claiming to build a link to the global financial system. Its success may open the door for non-sovereign cryptocurrencies and will be a groundbreaking regulatory initiative.

Timothy Massad

Former CFTC Chairman, advocates:

• The SEC has jurisdiction over securities-like crypto assets, but Bitcoin and others are not securities.
• Create a comprehensive regulatory framework through congressional legislation.
• The industry should start forming self-regulatory standards from now on.

Messari

It is believed that a self-disclosure system can alleviate SEC concerns and serves as an alternative option when the formal registration process is lacking.

William Mougayar

Advocacy:

• Promote safe ICO practices and better disclosures
• Advocate for a non-intrusive regulation by the regulators, allowing the market to evolve on its own for a period of time.
• Implementing a new regulatory approach rather than enforcing the existing regulatory framework

Hester Peirce

SEC Commissioner known as "Crypto Mom". Main points:

• Approve Cryptocurrency ETF
• Tokens used in functional networks do not belong to securities.
• The SEC's old framework may not be applicable to the new world of cryptocurrency assets.
• The SEC should not stifle innovation
• Urge the SEC to consider a new regulatory framework

Perkins Coie LLP

Advocate for a more crypto-friendly regulatory framework under the SEC.

ProShares, Direxion, etc.

The submitted ETF application was rejected by the SEC.

Ripple

Dissatisfaction with the SEC's lack of regulatory clarity. Main points:

• The SEC is putting cryptocurrency companies in an awkward position.
• The SEC should clarify rather than enforce.

Token Classification Act

A comprehensive bill supported by members of parliament, main content:

• Correct the issue of missing definition of digital tokens in the Securities Law
• Guide the SEC in regulatory reform for digital units protected by encryption technology.
• Adjust cryptocurrency-related tax policies

Union Square Capital

Support Coin Center and Blockchain Association, hold briefings with policymakers and regulators.

Fred Wilson

USV partners convey industry insights through blogs. Main points:

• Cryptocurrency networks are different from companies, and cryptocurrencies are different from securities.
• The SEC does not understand the uniqueness of crypto assets and needs a new regulatory framework.
• The SEC's current practices are harming the cryptocurrency sector.

Winklevoss Brothers

Operating the Gemini exchange, the submitted ETF application has been rejected multiple times. Launched the Virtual Commodity Association, focusing on self-regulatory principles.

Wyoming

Under the promotion of Caitlin Long, it has become the only U.S. state to provide a comprehensive and friendly legal framework. Main measures:

• Acknowledge individuals' direct ownership of digital assets
• Create a fintech regulatory sandbox
• Authorize new types of state-level savings institutions
• Authorize the first "Qualified Custodian" for digital assets

Despite strong calls from the industry, the SEC's stance remains ambiguous and contradictory. The SEC's actions are hindering U.S. blockchain companies from realizing their potential. There is currently a lack of high-level advocates, and regulation continues to be a barrier to innovation. The entire industry is eager for innovation but is troubled by the question of 'What will the SEC think?'. True innovators are turning to Asia or Europe. The U.S. needs to take action in a timely manner, or it may struggle to regain lost ground.