We Need Regulatory Clarity to Keep Crypto Exchanges Onshore and DeFi Permissionless

• The lack of clear regulation in the crypto market poses a risk to companies.
• Congress needs to bring regulatory clarity to the crypto market structure.
• Jack Solowey and Jennifer Schulp argue that this is necessary in order for U.S. businesses to remain competitive in the global market.

Lack of Crypto Regulation Risks Companies

The lack of clear crypto regulation risks sending companies overseas, putting them at a disadvantage compared to foreign competitors who are able to operate under more certain regulatory regimes. This was highlighted during Consensus 2023 by Senator Cynthia Lummis (R-WY) and Congressman Patrick McHenry (R-NC), who voiced their goals of developing legislation to clarify crypto market structure in the United States.

Impossible Situation for Crypto Market Participants

At a joint hearing of the digital assets subcommittees of the House Agriculture and House Financial Services committees, Congressman French Hill (R-AR) pointed out that firms are subject to competing enforcement actions from the SEC and CFTC, pushing entrepreneurs, developers, and job creators offshore. This is an impossible situation as it creates uncertainty for market participants while also preventing U.S.-based businesses from competing on a level playing field with foreign counterparts in the global marketplace.

Need for Regulatory Clarity

Jack Solowey and Jennifer Schulp argue that Congress must bring regulatory clarity to crypto markets by defining bounds around securities, commodities, and exchanges (both centralized [CEXs] and decentralized). This would help create an environment where U.S.-based innovators can compete globally without fear of punitive action from regulators or other government agencies due to conflicting regulations or enforcement actions against them.

Proposals Aimed at Keeping Exchanges Onshore

Senator Lummis has proposed legislation aiming at keeping exchanges onshore while maintaining a permissionless DeFi space as well as protecting investors from fraud or manipulation within these markets – all while allowing innovation within these markets without overly burdensome regulations stifling growth opportunities or hindering participation altogether due to compliance costs or other factors deemed too costly for new entrants into these markets.

Time To Act Now For Regulatory Clarity

Time is of essence when it comes to providing regulatory clarity around cryptocurrency markets – both domestically and abroad – so that innovators may continue working on what could be the next generation of financial infrastructure without fear of punitive action from regulators due conflicting regulations or enforcement actions against them hindering their progress towards achieving this goal.