Skip to content

The United States Crypto Industry at a Regulatory Crossroad

    Published July 18, 2023 – As the crypto industry continues to evolve and gain momentum, the United States finds itself at a critical regulatory crossroad. The potential gains and risks associated with this industry necessitate a well-defined framework that addresses the unique challenges faced by crypto companies and holders of crypto assets.

    Gaining Momentum: Seizing Opportunities and Overcoming Challenges

    A photorealistic picture, taken on a film Canon camera 30mm, of a man in a suit standing at a fork in the road. In the background, there is an American flag.

    In this article, we delve into the regulatory gray areas, the opportunity for the U.S. to lead in the blockchain industry, the need for addressing regulatory uncertainty, the insufficient approach by the U.S. Securities and Exchange Commission (SEC), the failure to foster the digital asset industry domestically, the rise of international competitors, the importance of American leadership and adoption, the progress made so far, the role of transparent accounting, the untapped potential for the U.S., and the high stakes involved in building a solid foundation for the future.

    Regulatory Gray Area

    The crypto industry in the United States operates in a challenging regulatory gray area. Unclear and opaque rules have created significant restrictions, leaving businesses and individuals uncertain about compliance requirements. State and federal regulators have often responded with harsh retaliation, leading to intimidation of early adopters and stifling American innovation. To foster growth and innovation, it is imperative for the United States to navigate this gray area and establish clear guidelines that promote the industry’s development.

    The Opportunity for the U.S.

    Despite the challenges, the United States has a unique opportunity to become a global leader in the blockchain industry. By embracing this technology and fostering its growth, the U.S. can set a global precedent, attracting businesses and talent from around the world. However, timely action is crucial to prevent losing ground to other regions that have already taken significant steps to embrace and regulate digital assets.

    Addressing Regulatory Uncertainty

    One of the key obstacles in the U.S. crypto industry is the difficulty for treasuries to hold digital assets. The lack of standardization and transparent accounting rules hampers the industry’s progress and creates compliance challenges. To address these issues, there is an urgent need for regulatory bodies to provide clarity and establish comprehensive guidelines that enable businesses to operate with confidence and transparency.

    Insufficient Approach by the U.S. Securities and Exchange Commission

    The approach taken by the U.S. Securities and Exchange Commission (SEC) in regulating the crypto industry has been inadequate, divisive, and counterintuitive. Rather than fostering innovation and providing clarity, regulatory enforcement has largely relied on imposing fines and charges. This approach not only fails to provide clear guidance but also hampers the industry’s development and prevents a deeper understanding of compliance requirements. A more proactive and collaborative approach is needed to support the growth of the crypto industry.

    Failure to Foster the Digital Asset Industry

    The United States has struggled to create a supportive environment for learning and development within the digital asset industry. Companies like Coinbase and Gemini have established business operations outside the U.S., seeking more favorable regulatory landscapes. To retain talent and promote domestic growth, the U.S. must proactively foster an ecosystem that encourages innovation, education, and collaboration among industry participants.

    International Competitors

    The United States faces strong competition from other regions that have embraced the crypto industry with greater clarity and support. Europe, for example, has established itself as a crypto innovation hub through the introduction of the Markets in Crypto-Assets (MiCA) framework, providing comprehensive guidelines for businesses operating in the sector. Additionally, the United Arab Emirates has adopted a welcoming approach, attracting industry giants and positioning itself as a favorable destination for crypto-related businesses. The U.S. must avoid vague guidelines and passive observation to maintain its competitive edge.

    American Leadership and Adoption

    The adoption of digital assets and blockchain technology is of paramount importance for the United States. By leading in these areas, the U.S. can drive innovation, enhance financial inclusion, and strengthen its position in the global economy. American leadership is crucial in shaping the regulatory landscape, fostering technological advancements, and paving the path forward for the industry.

    Progress and Next Steps

    Positive developments have been observed with standard-setting bodies such as the Internal Revenue Service (IRS) and the Financial Accounting Standards Board (FASB) taking steps to address digital assets. Implementation of rules and transparency for digital asset organizations is a positive step toward building a robust and compliant industry. However, further efforts are required to remove barriers to digital asset adoption and create a new market that benefits businesses and individuals alike.

    Role of Transparent Accounting

    Transparent accounting practices play a pivotal role in the mass adoption and legitimization of the crypto industry. Accountants have a unique opportunity to lead the way in promoting transparency and providing evaluation frameworks that instill trust and confidence in the market. By establishing robust accounting standards, the industry can gain credibility and attract a wider range of investors and participants.

    Untapped Potential for the U.S.

    The United States holds immense potential as the most diverse and supported market for crypto and digital assets. However, this potential can only be fully realized with a clear regulatory framework that fosters innovation and provides certainty to businesses and individuals alike. By establishing comprehensive guidelines, the U.S. can position itself as a global leader in the crypto industry, attracting investment and driving economic growth.

    Build Solid Foundation for High-Stakes Opportunity

    The crypto industry presents high-stakes opportunities for the United States, but building on a solid foundation is paramount. U.S. leaders have a responsibility to establish a clear regulatory framework that promotes innovation, protects investors, and fosters domestic growth. By embracing the crypto industry, the U.S. can leverage its potential, drive technological advancements, and secure its position as a global leader in the digital economy.