Polygon Executive: U.S. Securities Laws From the 1930s Need to be Re-Examined

Lavina Daryanani
Source: PYMNTS.com

The lack of regulatory clarity has been plaguing the crypto ecosystem in the U.S. for quite some time. Owing to the same, companies have started catering to masses outside the U.S. In fact, they are also looking to establish bases outside the country.

Ripple executive Brad Garlinghouse has time and again voiced out his concerns about the current hazy regulatory environment and how that puts the U.S. in a disadvantageous position. In fact, other stalwarts from the industry also share the same school of thought. Coinbase executive Brian Armstrong recently prompted that there are chances of his firm relocating and moving out of the U.S.

Lawmakers, at this stage, seem to be quite engaged with the subject of crypto regulation. However, engagement doesn’t always transpire into policy and legislation that could define the rules of the road. Elaborating on what to expect from Congress on regulations, Rebecca Rettig, the Chief Policy Officer at Polygon told Bloomberg,

“I think we’ll continue to see proposals like we just saw from the House Financial Services Committee on the stablecoin bill… There are efforts across the board to build out bespoke legislation for crypto, both for centralized actors and otherwise in the space.”

She added that people are “engaged” and Congress has already started “learning” about it. However, she also noted,

“Whether we will see there being meaningful engagement to get it passed through, both, the House and the Senate in the next two years for this Congress, I think may be difficult.”

Polygon exec talks about the outdated securities laws

One of the themes that Gensler recently pressed on was that non-compliance is a part of the business model in crypto. Polygon’s executive, however, disagreed with the same. She asserted that many “good actors” in the space have underlined that time and again. That said, she went on to add,

“I certainly believe that enforcement is one of the mainstays of his [Gensler’s] time in office, for sure, against the crypto industry.”

Recently, Commissioner Hester Peirce noted that SEC’s proposed rule change pertaining to exchanges hinted that everything needs to be centralized to be regulated. She went on to label the same to be “problematic.” Sharing her thoughts on the same and commenting on whether centralization is the key to regulation, Rettig said,

“I think that’s the way our regulations are written to date… The way the securities laws are written is with an intermediary in mind. That’s what was contemplated in the 1930s. I’m not sure that the people who wrote regulations back then for our securities markets. Our capital markets could have fathomed that we’d have technology that disintermediated the way we engage with the exchange of assets.”

She added,

“Some parts in the new proposed rulemaking from the SEC look to centralize everything. Or just assume that there has to be a centralized actor in the middle because, one, that’s how our securities laws are written. And two, that’s how we’re used to seeing our financial markets operate over these past decades.”

Also Read: Will SEC Chair Gensler Be Replaced for Crypto Abuse?