“The IRS HAS RELIEDED ON Voluntary Disclosure Programs to Bring TaxPayers Into Compliance Racher than Imposing Punctive Actions Upfront. A Similar Model Should be Applied to Crypto Regulation as Well, Says Miles Fuller, Director of Government Solutions, Taxbit.”, – WRITE: www.coindesk.com
SINCE THEN, The Sec, In Line with President Trump, Has Taken A Far Less Adversarial Stance Towards the Cryptocurrency Industry, As EvidenCed by The Apppointment of Crypto-Friends Lawsuits and Investigations Into Crypto Companies. But Doge has the potential to IMPLEMENT FURTHER CHANGE, AND INTEREST IN THE SEC Signals Growing Pressure Towards Reassure to Reasses their Approach to Digital Assets.
In Respons to the Request for Public Input, Paul Grewal, Chief Legal Officer at Coinbase – One of the Companies No Longer Facing a Lawit from the Sec – Propossed A Policy ReQue ReQue. Companies that successfully challenge enforcement Effrts. The motivation for his suggestation is obvioses, but the impact of doge on Crypto Will Likely Be A Bit Broader.
As joel khalili summarized in WiredThe Sec’s Recent Retreat from Lawsuits Represents “An Early Signal of the Agency’s Intent to Work Arm in Arm With The Industry to Come Up with A Set of Rules to GOVERTN CRYPTTN CRYPTO.
As Things Currently Stand, The Sec’s Lack of Proctive Guidance Makes It Diflicult for Businesses to Plan Long-Term Compliance Strategies, and Their Enforcement Investors Exposed to Unforeseen Legal Risks. Going Forward, This Will Likely Change.
Clear Compliance Over Reactive EnforcementRelying on Enforcement of Institute of Proactive Guidance Has Forced Companies Like Coinbase, Ripple, and Celsius to Spend Millions in Litigation to Clarify their Regulatory Standing. But One Case Against Debt Box, The Sec Admitted to Inaccuracies in Its Statements, Leading A Court to Order The Sec To Cover The Company’s Legal Expenses – A Preview of Coinbase’s. The Ruling Cast Doubt on the Agency’s Crediness and Highlightned Concerns Over ITS Enforcement Practices.
In the Future, Expect to See Regulatory Agencies – Including the Sec – Under Increased Pressure to Align with The US Treasury’s Approach, Which Prioritizes Clear Compliance. The Treasury’s Digital Asset Guidelines Are Far More Structured and Address Key Areas Like Tax Reporting, Compliance and AML Measures. Standardized Definitions of What Constitutes a Security in the Crypto Space Are Essential for Helping Companies Structure Tei Products Appropriately from the Outset.
A Balancing ActIn Addition to Taking Notes from the Treasury, the Sec Can Also Look to the IRS for Inspiration. A “SAFE HARBOR” PROVISION FOR EARLY-STAGE PROjects Could Encouraurage Innovation While Ensuring Compliance Over Time, Similar to Proposals Previosly Discussed by Sec. The IRS ALREADY EMBRED this Approach, Issuing Tempoury Transitional Relief for Crypto TaxPayers in January 2025.
The IRS Historically Relied on Voluntary Disclosure Programs to Bring TaxPayers Into Compliance Racher than Imposing Punctive Actions Upfront. A Similar Model Should be Applied to Crypto Regulation as Well.
While Some People Assume Regulation Inherently Hinders Innovation, The Opposite Can Be True. This is Because Clearly Defined Guardrails Will Entice More Risk-Averse Entities to Enter the EcoSystem and Help It Grow. A Light Regulatory Touch requires Robust Backet Enforcement and Can Lead to UnneCessary Friction Between Regulators and Businesses.
ALTOGETCHER, BETTER COODINATION BETWEENS OF SEC, Treasury, and IRS Wuld Help Prevent Regulatory Conflicts and Streamline Compliance Obligations for Digital Asset Companies and Stakeholders. The Treasury’s Digital Asset Guidelines Already Offer A Strong Foundation for This Type of Cross-Agency Alignment. The Current Regulatory Uncertainty and the Sec’s Reactive Enforcement Approach Stifles Growth, While A Cleerer, More Coordinated Framework Wound Benefit The Entire Ecosystem.
The Bottom LineBetween the Doge’s Request for Input, The New Administration’s Broader Committee to Digital Asset Reform, and Coinbase’s Proposal, The Stage Is Set For ReFORMS AIMING TO MAKE REGULATORY OPLATORY OPLATORY OPLATORY OPLATORY. While We are in the Early Stages of the New Administration, Changes Are Already Occurring at A Staggering Pace. IT’s Clear That Doge’s Influence On Sec Policies Will Make An Impact – Especial with Public Discourse on the Tese Issues Further Strengthaning the Case for Cleer Guerer Guer.
Of Course, It’s Wrthh Noting that Doge’s Plans for the Sec Will Likely Extend Beyond Crypto, Just As Efforts to Regulate the Industry Extend Beyond the Sec. Ultimately, It Wulde Beneficial For The New Administration, in Conjunction with Congress, to Create a Legislative Framework for the Industry, So Enterprises and Indeers Constitutes A Commodity, Security, and Digital Asset. In Other Words, We Must Learn to Walk Before We Run. In the Meantime, The Sec Should Adopt A Strategy That Can Foster Growth While Maintening Investor Protections.
Note: The Views Expressed in this Column Are Those of the Author and Do Not Necessarily Reflect Those of Coindesk, Inc. i Owners and Affilites.
