While the U.S. has long been known as a center of innovation and new technology, the nation’s regulatory bodies don’t seem to know quite what to make of the crypto industry. The U.S. is lagging behind countries in Europe and Asia in establishing crypto regulations, and it’s not because the industry is broadly resistant. Indeed, crypto insiders would welcome — are asking for — clear and consistent guidelines.
Still, one of the benefits of being late to the party is being able to learn from what’s working in the regions that have forged ahead. Below, 11 members of Cointelegraph Innovation Circle discuss a few of the most important things U.S. regulators can learn from actions taken in other countries as they begin to establish laws and guidelines for crypto.
Accept cryptocurrencies as a genuine good
The regulatory moves in the crypto fields in Indonesia and Turkey should serve as a lesson for U.S. regulators. Innovation and investor safety are promoted by other countries’ acceptance of cryptocurrencies as a genuine good when there are clear regulations and consumer protection. The goal is to take a balanced strategy while focusing on adoption for the digital economy. – Myrtle Anne Ramos, Block Tides
Consider a “sandbox” approach
U.S. regulators can learn from the “sandbox” approach seen overseas, particularly in the United Kingdom and Singapore. Sandboxes let firms test innovative fintech and blockchain products live but with regulatory leniency. This model fuels innovation while guiding future regulation, striking a balance between growth and stability. – Maksym Illiashenko, My NFT Wars: Riftwardens
Focus on disseminating information
Ask yourself why the Securities and Exchange Commission was even created in the first place. It was done in the 1930s, pre-internet, as an information resource and recourse mechanism to counter bad actors raising capital for scams. Today, some jurisdictions are correctly focusing on information dissemination around potential sales of new tokens and projects to lessen risk and create investor protections. – Jagdeep Sidhu, Syscoin Foundation
Recognize crypto as a different asset class
The older rules were made for the functioning of old economy assets, and they impede innovation and the growth of a new economy. Recognize crypto as a different asset class and set new regulations, guidance and clarification to help innovation and invention thrive. Technology cannot be reinvented — it needs to be understood well, and an environment to prosper must be created. – Nitin Kumar, zblocks
Adopt a balanced and innovation-friendly approach
U.S. regulators can learn from the U.K.’s Web3 regulatory actions by adopting a balanced and innovation-friendly approach. The U.K.’s framework, highlighted by the Financial Conduct Authority’s Regulatory Sandbox program, promotes experimentation, consumer protection and oversight. By fostering an environment that supports startups and emerging technologies, U.S. regulators can promote innovation and address risks in the Web3 ecosystem. – Vinita Rathi, Systango
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Develop a transparent set of rules
Make regulations as transparent as possible. European Web3 hotspots like Switzerland and Liechtenstein have seen an influx of investment due to their clear regulatory frameworks. Rather than interpreting the law on a case-by-case basis, U.S. authorities should realize that having a transparent set of rules is the best way to support blockchain innovation while also protecting against bad actors. – Wolfgang Rückerl, ENT Technologies AG
Consider the E.U.’s MiCA
Despite embracing crypto, the U.S. has yet to arrive at a concrete legal framework that adequately addresses the digital asset class. Regulators could consider the E.U.’s recent Markets in Crypto Act vote, which defined terms and set expectations for traders, companies and builders operating within its borders. Until a similar consensus is reached in the U.S., participants run the risk of being left in the dark. – Oleksandr Lutskevych, CEX.IO
Ensure new legislation serves society’s needs
Regulation by enforcement rather than legislation is a bad idea. Laws should be in effect to serve society’s needs, not the other way around. If we are simply following laws that make no sense, those laws should be repealed immediately. Obviously, other countries have made their peace with crypto. It is only the U.S. that has not. – Zain Jaffer, Zain Ventures
Ensure regulatory bodies don’t issue contradictory guidance
Communication is key! U.S. regulators — including the SEC, the Commodity Futures Trading Commission, the Federal Trade Commission and the Treasury — add to the confusion by contradicting one other. The Monetary Authority of Singapore works as a representative, communicating with regulators and creating consistency for all. The U.S. must take the time and effort to communicate with all regulators to reduce the chaos, protect investors and the public and nurture the market. – Hugo Lee, Haru Invest
Don’t be afraid that creating regulations will drive crypto overseas
U.S. regulators need to realize that regulation isn’t going to drive innovation overseas — it will actually foster technological advancements in the space. Projects need clear guidelines by which to abide. It’s the fear of retaliation without prior warning that drives projects away. – Anthony Georgiades, Pastel Network
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The speed of communication is of the utmost importance. As we have seen, the delay in communication and regulation is hindering many innovators from moving forward with blockchain-related business growth and development in the U.S., giving other regions the upper hand. – Megan Nyvold, BingX
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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