In an attempt to bring clarity to the ever-growing world of cryptocurrency, regulators are grappling with the ongoing challenge of determining which tokens should be classified as securities and which as commodities. One of the most significant barriers to establishing clear rules for the industry is the ongoing struggle between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). As both organizations hold different views on the matter, it falls upon lawmakers and industry leaders to pave the way for legislation that will help to establish much-needed guidelines in the United States.
Brian Armstrong, CEO of Coinbase, agrees with SEC Chair Gary Gensler about the importance of disclosures for the trading and investing of digital assets. Armstrong suggests that if a token is “sufficiently decentralized” and possesses some “specific utility around it,” it should not be considered a security. While the SEC continues to crack down on cryptocurrencies, attempting to hold them accountable for inadequate investor disclosures, Armstrong believes that Congress should step in and provide clarity on this divisive issue.
The recent draft bill proposed by McHenry-Thompson, which aims to classify tokens, exemplifies the government’s initial steps towards a resolution. This bill would allow token issuers to apply for their assets to be evaluated as commodities, with the CFTC holding the responsibility for regulating those assets. The SEC, on the other hand, would have the opportunity to argue for the assets they believe are securities.
Armstrong also supports the idea of creating a market for trading crypto securities, emphasizing the importance of providing proper disclosures for investors to understand their investments better. In his opinion, even for crypto assets classified as commodities, there should be “the normal set of disclosures.”
However, the ongoing debate around blockchain technology’s decentralized nature brings complications to the table. With no central authority responsible for issuing disclosures, the Ethereum network provides an example of how difficult it can be to formulate standardized disclosure practices that would adequately fit all types of digital assets.
While the battle for clarity in crypto regulations continues, industry leaders such as Armstrong show commitment to fighting for proper legislation. Overall, the crypto community eagerly awaits the development of guidelines by government bodies that will provide the much-needed structure for the ever-evolving digital asset marketplace. With the future of the industry at stake, the resolution of these regulatory ambiguities remains crucial in determining the direction in which the world of cryptocurrency will head.
Source: Blockworks
