The Securities and Exchange Commission (SEC) in the US is cool with crypto except when it’s not.

👎 The SEC charged Ripple with conducting an unregistered securities offering.

👍 Gary Gensler is nominated to lead the SEC and he taught a course on blockchain at MIT.

👎 The SEC charged LBRY with the same thing they charged Ripple with but for much less money.

👍 Hester Pierce has spoken and written positively about cryptocurrency as she’s commissioner at the SEC.

👎 In response to the 2017 ICO craze, the SEC provided guidance on Initial Coin Offerings (ICOs) that said ICOs may be securities offerings and fall under the SEC’s jurisdiction. Crystal clear guidance it is not.

👎 Let’s not forget the long rumored Bitcoin ETF the SEC refuses to approve.

Try to participate in most cryptocurrency funding events as a person in the US and you are almost certainly going to be met with, “Thanks, but no thanks.” This is because there is too much at risk allowing anyone in the US to participate in a crypto funding event due to the SEC’s unclear guidance or very clear actions (see Ripple and LBRY). I experienced this recently when I tried to sign up for the Acala Polkadot crowdloan event:

I'm sad. 😿 @danreecer_ @RobinWhitney_ pic.twitter.com/fFihCzuKeS

— Joshua Hoover (@joshuahoover) April 8, 2021

The Acala team is playing this smart and safe. While there is plenty of money to be made from those living in the US, the risk of a long legal battle with the SEC outweighs any of the benefits of allowing me or anyone else in the States to participate in the Acala crowdloan.

The reality is that regulation cannot possibly keep up with such a fast moving landscape like cryptocurrency and decentralized finance (DeFi). When there are outright scams involving US citizens, then the laws already on the books will almost certainly apply. Outside of fraud, the only thing that regulation is likely to do is slow down innovation. And, of course, the SEC is but one US agency responsible for regulating financial activity in the US. Let’s hope the SEC’s new leadership will take a lead in providing clear guidance for the crypto and DeFi space in the 🇺🇸 that encourages on-going innovation.