Cryptocurrencies have managed to garner a lot of attention from users worldwide and it has forced regulators to take a closer look at the technology. The United States has been cautious in forming guidelines for the cryptocurrency industry and this has been often led to the question regarding whether the United States is lagging when it comes to supporting this innovative field.
The answer from many people in the industry has remained, “yes”. According to Ripple’s General Counsel Stu Alderoty, the United States may be falling behind other countries. Alderoty, who appeared in the latest Block Stars podcast with Ripple CTO David Schwartz, opined that the problem in the US was that the cryptocurrency industry has been regulated through enforcement by the Securities and Exchange Commission [SEC].
In 2017 and 2018 when the Initial Coin Offerings [ICO] opened the crypto world for strings of fraud and market manipulation. Alderoty stated:
“The SEC did their job and…took a machine gun to the ICO craze…rightly so. But in so doing…they crammed this new technology into [an old] set of rules.”
The problems highlighted by many in the industry were the classification of crypto and the lack of understanding about the technology and its use. Even though the ICO craze witnessed many scam projects, the good that was brought to the industry was overlooked.
In order to mend the state of regulations in the country, it has been suggested that the SEC and the Commodity Futures Trading Commission [CFTC] work together. These two federal agencies could solicit feedback from the industry and its consumers to propose an ideal framework to protect the integrity of the market and the consumers while promoting innovation.
However, the lack of clarity has been proving to be costly for many projects like Abra. Abra, a crypto portfolio app was recently issued a joint fine by the SEC and CFTC for selling equality-linked synthetic swap products to customers using their crypto holdings, as per reports. Deemed illegal, the federal bodies levied $300,000 penalty on the application and forced the company to discontinue the swap feature.