‘Safe Harbor’ Proposal Resurfaces in CoinFund President’s Call for Crypto Laws
Legislation must form the bedrock for digital financial policy, the CFTC Global Markets Advisory Committee member said, and laws around stablecoins could be first
CryptoFX/Shutterstock modified by Blockworks
The president of Web3 investment firm CoinFund is the latest to urge lawmakers to pass crypto laws that encourage sector growth, noting that potential legislation around stablecoins — which he said could come first — presents a big opportunity.
In a white paper published Thursday, Chris Perkins, a member of the CFTC Global Markets Advisory Committee, also highlighted a years-old proposal from SEC Commissioner Hester Peirce designed to spur crypto entrepreneurs to more freely build decentralized networks.
Legislation must be the bedrock for digital financial policy, Perkins added in the white paper. He told Blockworks in an email that in his support for nuanced regulations for the sector, the goal is not to be combative.
“At a time when regulation seems unclear at best to industry practitioners, we hope to lend our expertise to help drive clarity and the principles-based outcomes that are imperative to catalyze responsible innovation,” Perkins explained.
The industry-wide call for better rules has become more frequent, as regulators with eyes on the space have not shied away from enforcement.
The CoinFund president was appointed to the CFTC Global Markets Advisory Committee in January. The group was created in 1998 to advise the commission on matters impacting the global competitiveness of US markets and firms.
Support for SEC commissioner’s proposal
Perkins is also calling for lawmakers to prioritize sandboxes and safe harbor programs, echoing a similar proposal from Peirce.
Peirce’s so-called “token safe harbor proposal” looks to give network developers a three-year grace period during which they could participate in or develop a decentralized network — all while exempted from the registration provisions of federal securities laws.
“Experimentation, exploration and, at times, failure are important components of innovation,” Perkins told Blockworks. “Entrepreneurs should be encouraged to innovate thoughtfully without fear of regulatory reprisal. Sandboxes allow this to happen.”
Peirce first suggested the proposal in February 2020 before publishing an updated version on internet hosting service GitHub in April 2021.
The update was made just days before Gary Gensler was sworn in as chair of the SEC — “the perfect time for the commission to consider afresh how our rules can be modified to accommodate this new technology in a responsible manner,” she said in a statement at the time.
The status of the proposal is unclear. A spokesperson for the commissioner did not immediately return a request for comment.
What legislation could come first?
While regulators have ramped up what many industry participants call “regulation by enforcement” in recent months, lawmakers of both parties have said crypto laws remain a near-term focus.
Legislation should be based on core principles such as client asset protections, disclosures, cost-efficiency and privacy, Perkins asserts in the white paper — adding it should be clear and predictable and rather straightforward to comply with.
While centralized intermediaries should be regulated, decentralized technologies should not, he added.
As for what crypto legislation could come first, Perkins told Blockworks regulation around stablecoins might not be far off. A draft bill was released last week, though lawmakers are still working through disagreements.
A day after the House Financial Services Committee met for an oversight hearing with Gensler, the new House Subcommittee on Digital Assets convened Wednesday.
Subcommittee Chair Rep. French Hill, R-Ark., called the ongoing “turf war” between the CFTC and SEC unhelpful and unsustainable.
Perkins said it should not matter which regulator has jurisdiction as long as “the same principles are advanced with processes that are nuanced and evolve with technology.” He called the Wednesday meeting “a positive step forward.”
“At a time when adversaries are working to displace the dollar, stablecoins can further solidify the US dollar as the global reserve currency, while delivering utility, reducing costs, mitigating risk and driving demand for government debt,” he said. “I remain hopeful that our policymakers will recognize this opportunity.”
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