Despite these concerns, McHenry praised the SEC for its work on Blockstack’s recent $23 million digital token offering under Regulation A+, the first SEC-authorized digital token offering whereby all investors (including nonaccredited investors) would receive “tokens” as opposed to equity in exchange for their investment.
McHenry cut to the chase and questioned whether the commissioners now believe there is a solid ecosystem for cryptocurrencies to exist and raise capital in the U.S.
Commissioner Hester M. Peirce, referred to by many as “Crypto Mom” because of her supportive stance on digital assets, conceded there is still work to do “to make sure people can develop digital assets in the U.S. in compliance with our rules.”
Peirce testified she would like to see more forward-thinking regulation regarding digital assets known as utility tokens, declaring, “I don’t know that the security law frame that we have right now is the appropriate law frame,” adding that she would like to see some sort of safe harbor for utility tokens.
SEC Chairman Jay Clayton expressed his support with the current system maintaining that “over the years, the SEC has developed a regulatory ecosystem that serves investors well.”
Chairman Clayton’s position, of course, depends upon what types of digital assets constitute securities, and that's another issue awaiting clarification from lawmakers. Notably, the SEC commissioners declined to confirm whether Facebook’s Libra Coin would eventually be considered a security in the U.S.
Interestingly, Rebecca M. Nelson, an author and specialist in international trade and finance, testified this summer that there has been increasing discussion about whether cryptocurrency regulations need to be harmonized across countries.
Whether or not nations across the globe will ultimately work in tandem to create a universal framework for digital assets remains to seen.
In the meantime, what is indisputable is that world-changing technology has arrived. It’s now up to lawmakers to ensure that it is maximized. Deciding whether an entirely new regulatory regime is mandatory or if the existing U.S. framework would suffice is the definitive starting point.
Dara Albright is a fintech author and advisor. This article was originally published via EisnerAmper’s Center of Transformation.