The regulatory pressure is mounting in the U.S., with more politicians questioning whether the current framework is adequate.
An opinion piece penned for Wall Street Journal by former SEC Chairman, Jay Clayton, and former Undersecretary of the Treasury, Brent McIntosh, have defended the United States’ existing regulatory apparatus regarding crypto and warned that excessive rulemaking could stifle innovation.
The discussions come as cryptocurrencies have been thrown into the regulatory spotlight once again in the wake of two crippling ransomware attacks in the U.S. Over the weekend, two senators deliberated on the prospect of banning cryptocurrencies as a solution to the ransomware attacks.
Clayton served as SEC head from May 2017 until December 2020 and stated that the agency did not take up Bitcoin regulation because the asset was declared not to be a security before he took up his position as its head. Clayton has remained in the industry following his departure from the SEC and currently advises One River Asset Management on cryptocurrencies.
McIntosh was the Under Secretary of the Treasury for International Affairs from September 2019 until January 2021, previously serving as General Counsel to the Department of the Treasury between 2017 and 2019.
The pair emphasized the challenge of finding a pragmatic regulatory balance that ensures basic consumer protections without stifling the crypto industry’s growth, warning that the sector could easily be subjected to excessive or insufficient regulatory oversight while praising existing guideline:
“Existing regulatory frameworks provide the tools to address many of the risks of new technologies without stifling their promise.”
They advised policymakers to ground their efforts in the principal objectives underpinning existing financial regulations. These include financial stability and the prevention of fraud and illicit activity.
The pair concluded that a coordinated approach is required that ensures the U.S. retains its role as a financial leader:
“A prompt, coordinated approach to regulatory clarity that builds on our existing knowledge base will empower responsible innovation and ensure that the U.S. financial system continues its leadership role in the formation of capital, the provision of credit, and the maintenance of stability on which the modern global economy depends.”
Those in power appear to be angling for a heavier-handed approach, with Treasury Secretary, Janet Yellen, stating that the misuse of crypto is a growing problem in February.
SEC chairman Gary Gensler also hinted at greater regulatory oversight for U.S. crypto exchanges in early May.