Since Bitcoin reached almost $20K in 2017, it has been established that cryptocurrencies have finally made it mainstream. However, considering the Wild West nature of cryptocurrencies, it was a matter of time before agencies from different parts of the world step in. The US Securities and Exchange Commission has stepped in to bring clarity to the crypto space.
So far, Bitcoin and Ethereum were considered commodities. However, Ripple and other altcoins received label whether or not these cryptocurrencies are securities or not. So far, Ripple has been dealing with lawsuits claiming that XRP is a security. Ultimately, in order to be considered a security, the US Securities and Exchange Commission makes use of the Howie Test.
Call for Clarity
This time around, crypto regulatory clarity is no longer coming from the crypto market. The Congress has now called for Securities and Exchange Commission Chairman Jay Clayton to tell investors how exactly it plans to regulate the crypto market. The letter comes from more than a dozen members of the House of Representatives.
According to the letter, “It is important that all policy makers work together toward developing clearer guidelines between those digital tokens that are securities, and those that are not, through better articulation of SEC policy, and, ultimately, through formal guidelines or legislation”.
So far, the SEC has treated the majority of the digital asset class as securities. This means that these cryptocurrencies are going to be governed the same as any financial instrument such as stocks despite Ethereum and Bitcoin being commodities that should be regulated by the CFTC.
According to Jay Clayton, he clarified that he doesn’t want to change the definition of securities in order to accommodate cryptocurrencies. SEC can only give clarity on existing laws but can’t change them without the participation of the Congress. And with the letter, it is a possibility that the Congress may participate in updating rules and regulations regarding the niche.
Regulatory Clarity is Still Needed
The letter has echoed the regulatory uncertainty felt by stakeholders within the niche. According to the letter, “Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere”. The letter also added that “We believe that the SEC could do more to clarify its position”.
This week, there was a four-hour meeting on Capitol Hill that was attended by some Wall Street and crypto firms. Among those that participated in the meeting included Fidelity, Nasdaq, State Street, Andreessen Horowitz and the US Chamber of Commerce.
Mike Lempres, who is the chief policy officer of Coinbase, said during the meeting that “We all want fair and orderly markets, we want all the same things regulators do”. He also added that “It doesn’t have to be done in the same way it was done in the past, and we need to be open to that”.
The interest of Institutional Investors
There is no denying that institutional investors are already looking at the crypto industry. You can take ICE partnering with Microsoft and Starbucks as an example. Many experts believe that it is only waiting for the time that there’s regulatory clarity before they pour fresh capital in the industry.