With such as important and controversial topic such as cryptocurrency, any legislative body needs to be fully prepared and dialed in before it can start to implement regulations. Anything less is an injustice not only to the body, but to the consumer, as well. There are currently a lot of terms and phrases being thrown around regarding cryptocurrencies and blockchains that have never been heard before, and consumers expect anyone involved with passing legislation to understand the inner workings to properly guide regulatory oversight. Perhaps, then, it would be a good idea for staff at the U.S. Securities and Exchange Commission (SEC) to attend, at a minimum, a cryptocurrency and/or blockchain boot camp so they can fully comprehend the business.
It’s apparent that SEC employees are behind the eight ball, lacking in the proper education to respond to the litany of cryptocurrency issues that have cropped up in the past couple of years. They use incorrect terminology, make assumptions and only add to the confusion surrounding the space. In the end, the companies in the blockchain and cryptocurrency space are who suffer, as the agency sees regulatory filings pile up.
In reviewing filings submitted to it, the SEC has been sending out boilerplate responses that read something like, “It is unclear whether the digital assets you intend to hold are securities. Please provide a detailed analysis explaining why you believe Bitcoin, Ether and any other digital assets that are likely to be held by the company are not securities as defined in Section 2(a)(1) of the Securities Act. Your analysis should address substantive differences between each form of digital asset and how those differences affect your conclusions.”
The first line of the response is key—if the SEC cannot determine what is or what isn’t a security, how will a business owner? The SEC has a budget of $1.6 billion and more than 4,500 employees that are responsible for around 26,000 companies. It also oversees the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation and the Financial Accounting Standards Board, the Public Company Accounting Oversight Board, the Municipal Securities Rulemaking Board, 21 national securities exchanges and 10 credit rating agencies. With all of that responsibility, it should be in a better position to define securities.
Understanding that it has a lot on its plate, perhaps it would be a good idea for the SEC—as well as any regulatory body—to take a time out, schedule an education seminar for all employees involved, and learn about the cryptocurrency space before getting involved in creating new legislation.
New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.