The biggest news is the SEC’s plans to create something called an “innovation exemption” for crypto firms. It’s either the world’s greatest master plan or disaster in the making. Frankly, it's probably a bit of both. Let’s not bury the lede, this is real progress and it could be very good for the US.

Innovation Unleashed Or Investor Endangerment?

Think about it: for years, crypto companies have been suffocating under a regulatory regime designed for Wall Street, not the decentralized web. These rules were conceived with broker-dealers and exchanges – much different entities – in mind. Now, they’re being applied to the fast-moving world of smart contracts, DAOs, and onchain finance. It’s akin to trying to fit a square peg in a round hole. Small wonder that nothing seems certain …

From all appearances, Paul Atkins, the new SEC Chair, understands this. He’s not just saying important things, though, he’s making the US the crypto capital. That’s not just lip service, it’s an acknowledgement that the best innovation doesn’t occur in a bubble. It requires space to innovate, to try new things, to fail without the fear of devastating legal consequences hanging in the balance. This is a big change from the “regulate first, ask questions later” approach that’s been the norm in years past.

Are we throwing the baby out with the bathwater here? Will this new exemption for securities issuers totally widen the door for scams, rug pulls, and other unregulated financial mischief-making? Just like with our proposed stock story above, are we really building a bad actors playground on the backs of everyday investors?

The crux of the problem is that our securities laws are outdated. They weren’t built for a world where code is king and writing the rules. Today, financial transactions can be done in milliseconds, with no intermediaries or barriers between borders. Attempting to enforce these rules on crypto is akin to bringing a horse and buggy onto the Autobahn. Sure, it will get the job done, but that’s going to be an ugly solution—not to mention an incredibly inefficient one.

Old Rules, New Tech: A Clash Of Worlds

The SEC is indeed pursuing a temporary on-ramp for crypto firms. This would give them the flexibility to create and test outside of some regulatory barriers. Our goal is to ignite a new wave of onchain product innovation. Simultaneously, the SEC has a daunting task of trying to rewrite rules to govern this rapidly changing terrain.

It’s not only a matter of improving the ease of doing business for crypto entrepreneurs. But it’s more than that too—it’s about creating a regulatory environment that will maximize the talent and investment we can attract to the US. If we want to responsibly lead in onchain finance, we need to provide the same fair playing field. Only in this atmosphere will innovators be able to truly innovate. Otherwise, we’ll only be spectators while other nations continue to profit.

So, what's the answer? A big step forward or regulatory irresponsibility?

The Path Forward: Cautious Optimism Required

It's a gamble, no doubt. I believe that it’s a gamble worth taking – done properly. The SEC needs to be vigilant. The announced exemption should be narrowly targeted, with public, transparent guidelines and strong monitoring and enforcement mechanisms. We can’t swing all the way to the other side, Wild West style and let things go unregulated and uncontrolled.

This isn't about being pro-crypto or anti-crypto. It's about being pro-innovation and pro-consumer protection. It’s a tension between supporting innovation and protecting public interest.

Now, hold up Gary Gensler’s regulate by enforcement approach was a disaster. It stifled innovation and created uncertainty. Though this new approach is risky, it has the potential to underwrite a new age of onchain innovation right here in the US.

  • Focus on specific use cases: Don't give a blanket exemption to everyone. Target specific types of onchain products and services that have the potential to create real value.
  • Require transparency: Demand full disclosure from companies that receive the exemption. Make sure investors know the risks involved.
  • Monitor closely: Track the performance of the exemption program and be prepared to make adjustments as needed.
  • Enforce the rules: Don't be afraid to crack down on bad actors who abuse the system. Show that there are consequences for breaking the law.

We require the wonder of new technologies, not the fear of missing out.

Now it’s time to get our sleeves rolled up and hit the ground running with it. America should lead the way. The future of finance is being created today and the US should be leading the charge. The SEC’s crypto leap could be the jumpstart we’ve long awaited. Fingers crossed that we all fall back on our feet…

We need the awe of new technologies, but not the fear of missing out.

It's time to roll up our sleeves and get to work. The future of finance is being built right now, and the US needs to be at the forefront. The SEC's crypto leap might just be the jumpstart we need. Let's just hope we land on our feet.