SEC’s Valerie Szczepanik: Crypto “spring” is imminent

20 March, 2019

The regulatory approach toward cryptocurrencies is designed to allow innovation to flourish, according to Valerie Szczepanki, senior advisor for digital assets at the U.S. Securities and Exchange Commission (SEC).

She appeared on stage last week at SXSW in Austin, Texas, for a Q&A session with attorney Daniel Kahan of Morrison & Foerster LLP.

Regulation is slow, but “crypto spring” will come

During the talk, Szczepanki said she’s optimistic that regulation will ultimately be a boon to the cryptocurrency market, even if it takes some time for the SEC to provide clarity on crypto rules and guidelines. Over time, she noted, the SEC will continue to become clearer about the nature of cryptocurrencies and the compliance rules surrounding the different kinds of digital assets.

“I do think if we hope to smell the crypto spring in the air, it will take people walking with the regulators,” Szczepanki said. “But I do think the spring is going to come.”

Businesses in the crypto space often have a tough time navigating the landscape and figuring out how to comply with current securities laws, but the gradual approach taken by the SEC is deliberate.

“The lack of bright-lines rules allows regulators to be more flexible,” Szczepanik said, adding that the SEC’s principles-based approach allows more opportunities to arise from the emerging technology: “I think if you were to propose a new regime of regulations in a precipitous way without really studying it, you might end up steering the technology one way or the other.”

Open communication yields better outcomes

One point Szczepanik emphasized was that fintech and ICO startups should take advantage of opportunities to communicate with the SEC. In fact, a newly launched division of the SEC called FinHub, overseen by Szczepanik, will provide a path for entrepreneurs, developers, and crypto advisors to seek input from SEC staff and test ideas, she said.

During the Q&A, Kahan noted that when it comes to securities laws, “it’s always better to find your regulators than to have your regulators find you.”

Although some companies have gone offshore to seek more lenient regulatory frameworks, Szczepanik contends that they would do better to abide by the more rigorous U.S. rules, since “doing it the right way” from the start will allow them to become “the gold standard.”

For more on SXSW and the new blockchain and cryptocurrency track that debuted this year, check out our previous post “SXSW 2019: The Year of Women in Blockchain.”

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