The Securities and Exchanges Commission (SEC) has not been very kind to this space. Their rejection of the bitcoin ETF after a four years long process at the very last minute was a very sharp slap for the Winklevoss twins.
While their very peculiar judgment on ICOs through a legal interpretation of the Slockit DAO suggested an ideological bent at the SEC against this space in particular.
Not necessarily because of the decision itself. But because of the way the decision was made in both cases. In the case of the bitcoin ETF, declaring an unprecedented rejection at the very last minute when they seemingly had made their decision weeks ago seemed calculated to send a signal.
Likewise, in the case of ICOs, declaring them to require general compliance with stock shares laws applicable to traditional companies based on the interpretations of facts – at times incorrectly – and law as applies to only one case is an approach you’d expect in unfree countries.
For in the land of the free, where everything is legal unless it is expressly declared by Congress to be illegal, you’d expect a public consultation, as well as public debate, on the benefits and disadvantages of these new innovations, combined with expert input and suggestions on the approach the SEC should take.
SEC’s strange behavior, therefore, seems to suggest this was the last administration’s attempt to rush through their own policies before republicans took charge, so making the latter look pretty bad in our eyes, especially considering their promises of cutting red-tape and promoting innovation.
That’s while we thought the republicans had taken charge, which doesn’t seem to be the case. It seems that the expected big shakeup has happened or is happening only now.
Perhaps we should have expected that machine to move slower than a snail, but if our analysis is correct, then it will be shown in their next decision which concerns this space.
In particular, the Winklevoss bitcoin ETF has been opened for review. The person in charge of approving or rejecting ETFs now, is a lawyer from the firm that advised Winklevoss on their ETF bid.
So chances of approval have seemingly increased. If they do actually approve it, we should expect the Ethereum ETF to be approved too.
That would signal a considerable change in regulators attitude towards this space, so much so that we might expect them to follow the general approach of UK’s conservative government.
That could mean a sandbox, whereby the rule book is sort of thrown out while under supervision during a trial period. Something which may kick in gear the US economy as our elders finally back innovation.
At this stage, it is too early to say whether they will, but the Republican’s general attitude is somewhat close to this space. That is, a belief in the free market, an encouragement of entrepreneurship and a promotion of innovation.
There are few other areas that embody the above more than ICOs. The previous administration in effect told us that this very innovative invention is subject to outright discriminatory laws whereby the very rich can invest in them unhindered while the rest are walled out.
Capitalism for the 1% and communism for the rest. That’s what their judgment boils to, a judgment that tries to take away from this generation its own invention.
That’s not to say there should be free reign, but the choice is not between free reign and discriminatory laws. There should be an outright exception if the ICO is capped at $20-$30 million, for example. There should be an exception if it is a protocol issued token, like the DAO. Because in that case it is the blockchain itself that holds the funds which are directly controlled by token holders.
In short, there should be nuance, a lot of nuance. As well as transitory arrangements and preferably a non-governing body. There are many things that can be done and many in this space want the involvement of regulators because we know there are people who try to cheat, but their involvement should not be through a hammer. Not by laying down complex law through a “judgment” as if they are Moses.
Regulators need to be smart and change with the times just as times are changing. More importantly, they need to work with us, and hear us, because we are the ones building the future, while they take months to change personnel or years to make a decision on an ETF.
American private enterprise is ahead of the rest, with only Britain at a close level. US has the talent, the money and the demand. So it is about times regulators back innovation and open the country for business. Give ETF, be smart on ICOs, open a sandbox, welcome the new generation.