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Global standards for financial markets are largely determined by the European Union and the United States, with countries adapting their national frameworks accordingly. However, when it comes to cryptocurrencies, the US is set to establish standards for this emerging asset class, influencing its future significantly.
Global Cryptocurrency Standards
In 2021 and prior, news about countries banning cryptocurrencies was common, but such headlines are now history. The involvement of the US under Trump’s administration and the EU’s MiCA have legitimized cryptocurrencies on a global scale.
Cryptocurrencies are poised to remain a new global asset type for the foreseeable future. This sector is witnessing strengthened innovation, with firms that produce real technology moving beyond pump-and-dump tokens and experiencing remarkable growth.
Beyond being the next revolution for the internet, this marks a new evolution for finance. It’s comparable to the period when finance first met the internet, with a shift towards widespread use of cryptocurrency networks as consensus layers, forecasting a new era where this normalization mirrors how the internet normalized finance.
Cryptocurrency Regulations
Cryptocurrency enthusiasts dubbed her the “mother of crypto.” Indeed, I am speaking of SEC member Hester Peirce. Even during the repressive days under the Gensler administration, she championed the freedom of cryptocurrencies, advocating for reasonable regulations and innovation-friendly approaches.
During a notable SEC speech, Peirce highlighted critical issues; the Commission’s recent approach to crypto lacks solid regulatory enforcement, needing rectification. Enforcement actions have replaced guidance on how securities laws apply to crypto, providing minimal useful guidance. While much of crypto remains outside traditional markets, changes approach rapid traditional-crypto financial intersections.
Reflecting on actions since Trump’s term, she pointed out most cryptocurrencies don’t fall under securities or investment contracts. When someone from the SEC’s crypto task force stated this, expectations of consecutive ETF approvals arise.
Discussing various areas like DAO, DeFi, and RWA, Hester strived to illustrate how the SEC could comprehend cryptocurrencies. Even though she clarified her views might not represent the institution’s stance fully, her focus was clear:
- We must create limited, innovation-supportive rules for cryptocurrencies. For instance, clarifying that meme coins aren’t securities allows them more freedom from SEC scrutiny.
- She proposed a time-limited safe harbor to enable crypto transactions under specific disclosure and investor protection requirements.
- She called for clear criteria to separate crypto assets from investment contracts.
- She advocated exemptions for airdrops, NFTs, and stablecoins not classified as securities.
Hester Peirce remains the most crypto-friendly name within the SEC, and this year’s adoption of her perspective will shape the US standard, impacting global regulations as well.
