US regulators are creating an “uncertain environment” for cryptocurrency and “frustrating” customers and the community.
These statements were made by Circle, the crypto-start up backed by the likes of Goldman Sachs, EverBright, IDG Capital Partners, and Accel Partners. In a blog post, they spoke of their disappointment over the way that current US laws are “chilling innovation” and hurting both the national and international market.
They called on authorities to consider implementing a “clear, forward-looking regulatory framework from crypto” through the creation of a “new class of financial instruments”. They explained that many digital assets span several classifications at the same time, meaning that conventional classifications are not applicable or suitable in these cases.
Circle added that they have repeatedly brought up this issue with policymakers in the US, because they want the potential of blockchain and crypto to be completely realised. They also called on lawmakers to become more up to date with the way that they approach the sector.
“We have also urged lawmakers to stop applying laws written in the 20th century to technologies created in the 21st. For example, one of the main factors that determines whether or not a crypto asset can be regulated as a security is something called the Howey test, formulated by the Supreme Court in 1946.”
The blog accused authorities of making pro-crypto statements and speeches, yet not following this up with responsible or appropriate legislation. Circle called them out on their repeated moving of the goalposts, noting that “the consequences of a mistake can be serious financial and legal consequences for an organisations, as well as its officers and employees.”
In April the SEC published a document called the “Framework for Investment Contract- Analysis of Digital Assets” in which it attempted to clarify the existing law. Circle do not agree and in the post, stated that the Framework “undercuts” previous ideas expressed by the SEC, particularly in terms of whether a digital asset could be considered as a security.
Conflicting signals like this are resulting in dire circumstances for the market and those operating within it.
Just this week, it was reported that Circle had been forced to lay off 10% of its staff due to a “restrictive” regulatory climate. The week before, the Poloniex exchange, also owned by Circle, delisted nine cryptocurrency tokens for its US customers.
"It’s highly unlikely that any of us will be using Bitcoin in five or ten years."
-Jeremy Allaire, CEO of Circle, 2016
"It's highly unlikely that any of us will be using Circle in five or ten years."
-me, CEO of my Twitter, today https://t.co/4zarMWqEbC
— Stephen Cole (@sthenc) May 22, 2019
This has led some to believe that despite Bitcoin making huge increases in value over the last few weeks, it could be the end of the line for Circle.
Circle was set up in 2013 to drive “a new kind of global financial services company” where individuals, institutions, and entrepreneurs could come together to use, trade, invest, and raise capital with crypto and blockchain based products. They were backed with $140 million of investment raised by some of the world’s most prominent and respected venture capitalists.