How The Intersection Of Cryto and Regulation Is Heating Up

Written by Lauren deLisa Coleman

Those well-entrenched in the cryptocurrency scene are keeping one eye on technology, trading and innovation while keeping the other on the intersection of policy and law. Several recent developments indicate growing interest from various parts of the crypto ecosystem when it comes to regulation of this emerging industry.

 

First, key political news outlets recently reported that for the first time in their lobbying disclosures, three major organizations have listed cryptocurrency as an issue: the Association of National Advertisers, the Investment Company Institute and the National Venture Capital Association.  In addition, financial services giant Fidelity also has disclosed that it is lobbying in Washington, DC on Bitcoin and digital assets.

 

Simultaneously, the SEC is evaluating whether cryptocurrencies used in initial coin offerings are actually securities. If so, they would be subject to strict regulation, which could make them less alluring for those who invest.  The growing interest in the arena has made policy makers begin to look even more deeply into the inner-workings of the industry.  Decisions they make either for or against definitions and laws around crytocurrency trading will deeply impact the industry.

 

To that end, Valerie A. Szczepanik was recently named Senior Advisor for Digital Assets, as well as Associate Director of the Division of Corporation Finance at the SEC. She will be responsible for reviewing all SEC Divisions and Offices regarding the application of U.S. securities laws to digital currency including ICOs.

Szczepanik the former head of the SEC’s distributed ledger group and is said to be very much focused on protecting investors in the space of cryptocurrency given the large amount of fraud.

 

Indeed, CNBC.com reported that the SEC it ICOs are, In fact considered securities by the agencies standards and need to register with the agency.  However, the agency notes that there is a large lack of reporting as such.

"We're underwhelmed by the enthusiasm for coming within the regulatory structure right now," Brett Redfearn, SEC Director of division of trading and markets, told CNBC at the Sandler O'Neill Global Exchange and Brokerage Conference Wednesday.

As those in the industry brace for what could be abrupt changes in business, certain companies are already well-placed for the next wave in crypto. In fact, ZEN, a decentralized network for the emerging generation of pop culture video editors, has announced that it is one of the first-ever pre-ICOs in the world to be SEC-compliant and the company has designed this campaign to match its ethos of empowering stakeholders, making it broadly accessible to almost everyone including international and non-accredited investors. Former Zynga lead systems engineer Frank Erik Banks launched the company not long ago which enables creators to make money through peer-to-peer transactions as well as audience- and advertiser-driven programs in an unprecedented offering via the company’s ZENCoin.

As such this hot new area gives way to greater structure, those in the space will, no doubt, develop innovative ways to still drive opportunity while complying with lawmakers and authorities in the financial sector.  We are certainly only at the beginning of a very new system that will disrupt worldwide financial exchange to its very core.

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