A clear regulatory framework for crypto in the US is unlikely to materialize in the near future, according to former SEC Counsel Coy Garrison. Other issues have taken the attention of policymakers away from the industry, leaving crypto regulation to compete with a crowded field of concerns. Nonetheless, establishing such regulatory guidelines is essential to keep the thriving world of digital currencies from becoming overwhelmed by uncertainty.
Garrison suggests that a realistic timeline for the development of crypto regulation could span years, with Congress possibly taking six to eight months to initiate an order to the SEC. Following that, the SEC might need another six months or more to complete their rulemaking process, including soliciting public feedback and modifying proposals based on comments received.
In the meantime, Garrison points to Canada as a potential model for the US to follow as they work toward comprehensive cryptocurrency regulation. Canadian requirements for crypto platforms include addressing conflicts of interest, providing basic risk disclosures to account holders, and implementing know-your-customer (KYC) onboarding procedures. While platform registration with regulators is pending, businesses must also meet additional requirements to maintain compliance.
Garrison’s former colleague, SEC Commissioner Hester Peirce, has gone on the record stating that the US is hindering itself by not establishing a strong regulatory regime for cryptocurrencies. Garrison believes that fostering innovation and job creation while protecting investors and consumers should be a non-partisan goal that both major political parties can support.
However, the path to comprehensive cryptocurrency regulation in the US remains full of obstacles, particularly given the fierce competition for attention in Washington. High-profile concerns such as the debt ceiling, banking crisis, and the farm bill add pressure on policymakers and limit the time and resources available for creating effective digital currency regulations.
Despite these difficulties, Garrison remains optimistic that the US can find the right balance between innovation and regulation, building on its history as a leader in developing financial markets. As the industry continues to grow, it will be essential to establish a clear set of rules that safeguard consumers while promoting progress in the digital currency space.
In the meantime, the best-case scenario could see the SEC engaging with the industry and working collaboratively to create a workable regulatory framework for cryptocurrencies. A joint rulemaking with the CFTC, similar to the shared jurisdiction over swaps, is another desirable outcome. However, the potential for continued enforcement actions with no overarching plan remains a real possibility, representing the worst-case scenario for the industry.
Source: Blockworks
