SEC Needs US Congress' Support to Draft Updated Crypto Regulations: Circle CEO

Jeremy Allaire, the Co-Founder and CEO at Circle, a multinational fintech firm focused on providing services related to cryptoassets and blockchain technology, has argued that American regulators have taken an “extremely broad view” regarding which cryptoassets “might be deemed securities.”

“Responding Responsibly To Regulatory Uncertainty In America”

Allaire, the former Chief Technical Officer (CTO) at Macromedia (acquired by Adobe Systems), confirmed that crypto exchange Poloniex (owned by Circle Internet Financial) will stop supporting trading for Ardor (ARDR), Bytecoin (BCN), Decred (DCR), GameCredits (GAME), Gas (GAS), Lisk (LSK), Nxt (NXT), Omni (OMNI), Augur (REP) “on Wednesday, May 29th, 2019.”

Commenting on Circle’s decision to discontinue trading for these digital assets, Allaire wrote (in a blog post published on May 21st, 2019):

We don’t think that they should be considered securities, but [we] need to ensure that we comply with US laws. Our decision to geofence assets represents our effort to respond responsibly to the uncertain regulatory climate in America.

Allaire added:

We believe that digital assets represent a fundamental new class of financial instrument that defies simple classification as security, commodity or currency.

Categorizing Cryptoassets Based On “Context And Use”

According to the political science, economics, and philosophy graduate from Macalester College, there are many cryptoassets which can be considered a currency, commodity, and/or a medium-of-exchange (MoE) - “depending on their context and use.”

SEC Needs Support From Congress

Allaire believes “innovative technologies deserve new regulatory frameworks, and [his firm] will continue to advocate for change.” However, the Circle Co-Founder clarified: 

Without congressional action, the US Securities and Exchange Commission (SEC) is forced to rely on 85-year-old laws and 73-year-old court cases to develop guidance about which digital assets might be considered securities.

Expressing views similar to other crypto industry participants, Allaire pointed out that the current laws (in the US) are “inadequate to address crypto.” He also mentioned that Circle Internet Financial’s management has “taken the message to Congress for years.”

US Congress Members Now More Receptive Towards Drafting Crypto-related Laws 

After many discussions held with members of the US Congress, Allaire revealed that the company’s efforts are “starting to bear fruit.”

Allaire noted that Reps. Warren Davidson (R-OH) and Darren Soto (D-FL) released the Token Taxonomy Act last year. Per the Circle CEO, the Act “excludes digital tokens from the definition of a security.”

Furthermore, Allaire believes the Token Taxonomy Act provides more regulatory certainty, or clarity, so that the nascent token economy can continue to grow. Notably, Allaire revealed that “when the [provision] was reintroduced this year, it had more sponsors (in the US Congress) than the prior year.”