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At a difficult time for government-industry relations, US regulators and cryptocurrency insiders sit down for a meeting.
The Securities and Exchange Commission (SEC) will hold its first Financial Technology Forum on Friday at the agency's headquarters in Washington, DC, to discuss various issues related to digital badets and distributed register technology (DLT). The list of speakers includes a dozen legal, financial and technical experts, as well as several key officials of the SEC.
Yet, while some see an opportunity to voice industry concerns and better understand the SEC's point of view, the forum comes at a time when some major crypto companies are taking a more aggressive approach.
The crypto start-up Circle has said this month have dismissed 30 of its employees, accusing "a regulatory climate increasingly restrictive in the United States.
In a subsequent article on his blog, Circle said the SEC had, at the very least, issued confusing, even contradictory instructions. The company last year quoted a speech by director William Hinman, who pointed out that decentralization was a key factor in determining whether a token was a security and a more recent framework that did not mention decentralization.
The Kik messaging platform recently made headlines with a $ 5 million fund to "defend cryptography" from any regulatory override. The crowdfunding campaign – to which individuals can donate using cryptocurrencies – aims to help companies (including Kik) fight SEC lawsuits, if the regulator sues them for violations of the law. securities.
The regulator sent Kik a "Wells Notice" in November 2018, informing the company that SEC staff members believed they had violated securities laws by raising $ 98 million at a symbolic sale of its kith cryptocurrency. Kik CEO Ted Livingston said the company has spent about $ 5 million to contact the regulator ever since.
Circle, Kik and others argue that the SEC does not clearly explain what is or is not a security that hurts the industry and hampers innovation in the United States.
But it does not appear that this uncertainty will be resolved Friday, given the composition and agenda, not to mention the legal limits of what the SEC can do.
A place at the table?
A person familiar with the SEC forum told CoinDesk that she was concerned about the list of panel members.
While many of them are experts in their respective fields, few of them come from cryptography startups – or companies that would immediately benefit from greater clarity.
"There is no broker here, Fidelity may say that they want to be a qualified dealer, but there is no qualified dealer here," said this person, referring to David Forman of Fidelity Brokerage Services, who will speak about trading and markets. . "No entity would be subject to the SEC's regulations in question."
Referring to the stakeholders of Deloitte and Ernst & Young, the person stated:
"I know it's important to have four big accounting firms [SEC chairman] Jay Clayton … but it would be nice to have an investment manager talking, because that's the investment manager's consideration. "
Kevin Werbach, a professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania, retorted that "It is impossible to propose an agenda for an event like this that represents all the players in the sector. ".
"There will always be insufficiently represented points of view," said Werbach, who will speak at the forum. "I'm sure the SEC has been thinking a lot about who to invite to get the best possible debate on the issues that matter most to them."
Werbach also noted that startups can also engage with Finhub – the SEC wing focused on financial technologies – in other ways.
Open dialogue
Still, the fact that the SEC is collaborating with the crypto sector is promising, said Jay Baris of Shearman & Sterling.
Baris, a member of the SEC's forum panel, said that the agency "reaches out and says" to us, "and I think it's a good idea."
The SEC opens a two-way flow of communication: market participants are able to express their views, but it is also able to explain why it addresses regulation as it does. is, he said.
Another speaker, John D'Agostino of DMS Governance, a provider of services to investment funds, said the industry should pay attention to SEC's agenda topics (capital formation; trade and markets; investment management; and industry trends for DLT).
Baris adds:
"This is not structured as a legal forum, but as a forum for information sharing."
IBM's Christopher Ferris echoed this sentiment, telling CoinDesk that his panel would look to the future and focus more on areas in which the cryptographic space could be oriented from the point of view of technology or use cases.
Real action
In any case, asking regulators to clarify cryptography rules may not be the best avenue for the industry.
Margaret Rosenfeld, a partner at K & L Gates LLP, told CoinDesk by e-mail that US regulators depend on what is already described in the laws and laws in force.
"We have to understand that these American regulators … can not forge new ways in the law," she said. "The appropriate governmental authority to which we must all seek clarification at this stage is Congress."
Circle's blog agrees. The company said it has raised awareness among US and foreign policymakers about "why digital badets represent a fundamentally new category of financial instruments."
Congress must pbad laws that deal directly with cryptocurrency and blockchain technology, so that the US is not left behind by other nations, the blog said. However, until new laws are pbaded, Circle has announced its intention to continue litigating in front of regulators.
As such, said Werbach, "anything that gives regulators more direct exposure to thoughtful representatives of the industry, and vice versa, is likely to be productive".
He concluded:
"There are many personal contacts between the two parties, but a full public event like this provides an opportunity to badess the situation as a whole."
Image of SEC President Jay Clayton via CoinDesk Archive
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