Still, Gensler’s SEC certainly did seem like a moralizing, inflexible gale force wind. Enforcement, enforcement, enforcement. It sent a message that has left many in the crypto ecosystem feeling cornered, repressed, and quite honestly, persecuted. Was every project a scam? Of course not. Under Gensler, it seemed like that was the operating presumption much of the time. Now, with Paul Atkins at the helm, the big question is: will things finally change? Will we get the regulatory environment we need at last, a fair level playing field that encourages innovation and competition without compromising important protections for investors.
Fairness: The Missing Ingredient Under Gensler?
The outrage expressed by many in the crypto community wasn’t necessarily about regulation itself. It wasn’t that it was a bad thing to do, it was just how it was being done. “Policymaking by enforcement” isn’t just a fad expression, it’s the perfect description of this approach, where the rules get laid out retroactively, via court cases and agreements. Now, picture trying to build that same house, then getting halfway in only to learn that the foundation you’re pouring is suddenly against the law. That’s exactly how it felt for most Web3 startups.
Oh, and let’s be real, you can’t assemble a positive vision if you’re always looking in the rearview mirror. At this juncture, anxiety begins to set in. You worry that every time you make an accidental misstep you’ll be exposed to serious consequences. This fear, this uncertainty, stifles innovation. It drives talent and capital elsewhere.
Now, Atkins has committed to making that happen with a "rational, coherent, and principled" regulatory framework. Just those words alone go a long way toward providing hope. A framework implies structure, predictability, and fairness. It’s about understanding the rules of the game before you even begin to play. It means having a chance to comply.
From Memecoins to Monetary Policy?
Here's where things get really interesting. Surprisingly, this administration is much more interested in cryptocurrency. They even released a memecoin and discussed creating a national crypto reserve! Think about it: it signals a fundamental shift in how political power views digital assets.
Unexpected connection time: remember when the internet was new? Like all major technological shifts, governments had a difficult time at first grasping and regulating it. Some were careless in how they approached it, others were too transparent in their attempts to regulate it. As time progressed, they began to understand that the internet could be an incredibly powerful tool in which everything could be used for the positive or the negative. Crypto is going through a similar evolution.
A planned reserve, even one funded by asset forfeitures, is a message. Third, it accepts the reality that crypto is not a fleeting phenomenon, but a disruptive force that should be reckoned with. Most importantly, it’s a sign that governments are beginning to understand the need to focus on how to harness its potential – rather than killing it. Here is where all three of these aspects—awe, wonder, and surprise—become relevant. Or dream of a day when cryptocurrency is the pillar of your national economy!
Look, I know that Trump’s team’s new meme coin sounds like a bad joke, but it’s not, and it’s a brilliant marketing ploy. It taps into the tribalism of crypto. This newfound sense of community is perhaps one of the most potent catalysts for innovation in financial technology. It gives readers the sense that they’re “in the know,” that they’re in on something fresh and cutting edge.
MiCA-Like Regulation: A Double-Edged Sword?
We would expect Atkins to propose a full-fledged regulatory framework for crypto, akin to the EU’s MiCA. This is where we need to be careful. While MiCA provides overall regulatory clarity, it is far from perfect. As a result, it’s not only supertechnical and comprehensive, but complicated and even burdensome, particularly for projects with lower environmental impact.
A MiCA-like framework in the US would be a mixed blessing. On one hand, it would deliver the regulatory clarity that an overwhelming majority of the Web3 startups so desperately seek, bringing billions in investment and helping innovation flourish. Conversely, it may suppress transformation by enforcing draconian regulations and compliance expenses.
Don't assume that a MiCA-like framework will automatically solve all the problems. Web3 startups need to actively engage in the regulatory process, making their voices heard and advocating for rules that are both fair and effective.
Is MiCA really the best model for the US? And perhaps most importantly, do we need a uniquely American approach to crypto regulation? It needs to live up to our values of innovation, entrepreneurship, and individual liberty!
Atkins’ SEC has a once-in-a-generation opportunity to set the tone for crypto’s future in the US. The question now is, will it take that opportunity with vision, courage, and a real commitment to providing equitable outcomes for our nation’s children. The answer, as ever, will be the execution. For the first time in memory, hope and expectation are palpable. The folks who actually live in those communities certainly hope that the answer is indeed a resounding yes.
And don’t forget that even in a friendlier environment, compliance is still pretty important. Don’t play the odds and think you’ll be able to skate by on doing less. Ultimately, it’s about creating a more sustainable future for the industry, rather than seeking those short-term windfalls.
Let’s not overlook Mark Uyeda’s interim impact. Closing investigations and forming a crypto task force indicate that this change has already begun. This is encouraging, to be sure, but this is just the first step.
The next several years will undoubtedly be momentous for crypto. The choices that Atkins’ SEC makes will deeply shape the future of this new industry. Let's hope they make the right ones.
