‘Crypto Czar’ Valerie Szczepanik Says Crypto ‘Spring’ Is Coming
The senior advisor for U.S. Securities and Exchange Commission (SEC)’s digital asset division Valerie Szczepanik has reportedly said that regulating the crypto market would ultimately boost the industry.
Speaking at the annual South by Southwest (SXSW) festival in Austin, Texas, Szczepanik said that if people hoped to “smell the crypto spring in the air,” they would need to walk with the regulators.
She also added that “[that crypto] spring” was coming.
She noted during a Q&A session that SEC’s regulatory approach aims at helping the burgeoning crypto and blockchain sectors to flourish. However, these efforts do come at a cost, with the result being that there are no clear guidelines that can help new businesses within the sector.
Szczepanik also thought that the lack of clarity, what she called “bright-line rules,” means that regulators become a little more flexible in their approach.
Responding to entrepreneur concerns about the current securities laws and their potential to stifle growth, the SEC advisor said that by sticking to a principles-based approach, the agency would allow more opportunities to emerge from within the crypto space.
Addressing the gathering, she added that any new proposals for regulations would need to be studied carefully, as failure to do so “might end up steering the technology one way or another.”
Szczepanik also took time to reveal her thoughts about stablecoins; eventually saying that the so-called algorithmic stablecoins (those whose value has to fluctuate to help the price of another coin stay fixed) could easily be securities.
She noted that even though people have different labels for these assets, but SEC’s work is to “look behind the label” and use the law to give the stablecoin “the label it deserves.”
Companies should talk to the SEC
Szczepanik also took quite some to emphasize the need for crypto companies to embrace and utilize SEC’s FinHub. This is an office the regulator has set up to allow crypto firms and token issuers to engage the commission.
According to her, any dialogue a party holds with the agency is likely to benefit the companies more. she gave the example of SEC’s dealing with cybersecurity firm Gladius, that ostensibly ran an unregistered coin offering (ICO).
In a settlement reached in February between the company and the securities watchdog, the SEC explained that no penalty was imposed on Gladius, with the main reason being that the firm had self-reported.
The Gladius team had also reportedly remained in constant communication with the regulator throughout the probe.
Szczepanik also noted that some firms choose to go offshore, to countries and regimes believed to provide lenient regulatory ecosystems.
However, those companies that choose to set up operations within the U.S. and thus abide by the supposed stronger rules, she said, stand to benefit more from the many opportunities available for growth.
These companies are likely to become the “gold standard” when they do it right and reap the benefits that come with it.
Don’t wait for “forgiveness”
While the SEC carries out its company reviews, one thing that most entrepreneurs are eager to get from the commission at the moment is the “no-action letter.” The letter simply acknowledges that the regulator has reviewed a company’s business and sees no need for further regulatory action.
Fondly known as the ‘Crypto Czar’ within the crypto circles, Szczepanik has previously reiterated the importance of these letters, although experts say that no firm has yet received a no-action letter.
She, however, maintains that it is better for companies to engage the regulators before proceeding with their plans rather than “mess” and then rely on forgiveness. And to lead by example, she says she’ll be hitting the road to meet and engage with entrepreneurs.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.