The United States, a world tech leader, is at a crossroads in how the cryptocurrency business will be developed and regulated. The industry has been cut off from banking services due to the lack of regulatory certainty and high-profile meltdowns. When I researched, the current strategy for crypto regulation runs counter to past trends of embracing new technology and risks limiting progress and creativity.
The business community is wondering why the United States is taking such a cautious stance instead of establishing a level playing field to encourage and benefit from the sector’s potential for innovation. I have observed that the blockchain business is young and very mobile; if the United States keeps going in the current direction, it will lose the skill and opportunity in this multi-trillion dollar sector to countries with more accommodating regulations.
Coinbase’s SEC Complaint – Intersection of Crypto Innovation & Regulatory Challenges
Because of the internet, communication between people has undergone a dramatic shift. It also made it easier for con artists, hackers, and other bad actors to victimize unsuspecting people. The United States has encouraged further development of the internet because the new technology’s benefits are seen as outweighing the risks.
The revolutionary effects of blockchain technology have just begun, yet the technology is not without its share of scams and exploitation. The crypto sector has drawn some of the greatest minds and has the ability to dramatically transform multiple sectors for the better. Yet due to recent governmental moves, legitimate enterprises and criminal actors have been grouped.
A brief about Coinbase
Coinbase Wells’ notice recommended enforcement action from the SEC on March 2023. The SEC is suspicious of Coinbase because it may be offering securities but is hesitant to comment or clarify. Being a market leader in digital assets in the United States, Coinbase is known for its dedication to regulatory compliance and helping with dealings.
Coinbase, the largest cryptocurrency exchange in the United States, requested a federal court to compel the Securities and Exchange Commission to respond to an appeal it filed last year seeking formal rulemaking across the digital assets sector. This move creates rising tensions with Coinbase vs SEC.
Through the Sands of Time – A Reflective Insight Into the History
The current U.S. policy towards digital assets is unique in comparison to earlier policies. The United States has risen to the top of numerous industries around the world thanks to its progressive policies and regulatory frameworks.
Intellectual assets
The United States has an effective framework for protecting intellectual property, including patents, trademarks, and copyrights. These grants provide temporary rights to use and sell intellectual property to individuals and businesses. For example, the automotive industry in the United States has reaped several rewards from the nation’s I.P. system. New automotive technology, such as electric vehicles, owes a great deal to patents.
The United States has given more importance to the development of numerous high-potential sectors, which have subsequently contributed to the country’s economic dominance. It has also led to the advent of numerous game-changing technologies. Most important of all, Blockchain technology boosts investor confidence and increases the transparency of risks. It also strengthens the progress of the United States.
Also Read: Trade Finance Fraud: How to Spot & Stop It on Its Tracks
Incentives for taxes
The U.S. government has made extensive use of tax incentives to encourage innovation in a variety of sectors. The R&D Tax Credit allows companies to reduce their taxable income by a percentage of the money they spend on R&D. Firms that belong to renewable energy or other technology, which has a responsibility to invest in research and development to introduce novel goods, services, or solutions, have benefited greatly from this. The Production and Investment Tax Credit, provided by the federal government, has also contributed significantly to the expansion of the renewable energy sector in the United States.
Fundings
The federal government has formed agencies specifically to fund R&D activities in a variety of sectors. Two such cases are the following:
- DARPA (Defence Advanced Research Projects Agency)- This has been around since 1958 and was influential in the creation of GPS. Robotics, A.I., and biotechnology are just a few of the fields that have benefited from DARPA’s investment. It had a budget of $3.5 billion in 2021.
- NSF (The National Science Foundation)- This was founded in 1950 and has aided in the advancement of the internet, cutting-edge industrial methods, and sustainable energy sources. It had an estimated budget of $8.5 billion in 2021.
Beyond Boundaries: Embracing Uncertainty for Regulatory Innovation
In 2022, Vice President Joe Biden ordered the federal government to coordinate their efforts to regulate digital currencies. In the absence of federal regulation, the United States relied on money transfer laws to control operations involving digital currencies.
Problems in areas like consumer protection and anti-money laundering have arisen as a result of this regulatory ambiguity. On an ongoing discussion, it had become unclear whether:
- The SEC or the CTFC has authority over a certain asset.
- The asset in question is a security or a commodity.
But after the approval of MiCA, the world’s first complete framework for crypto regulation, the European Union was ahead of the U.S. Transparency, disclosure, authorisation, and monitoring of transactions are just some of the new obligations that MiCA will place on cryptocurrency exchanges, token issuers, and traders. With the legislature’s support, MiCA can be passed into law in 2024, providing a framework widely regarded as a workable response to the problems now facing the sector.
Last but not least
In my opinion, as the cryptocurrency industry expands significantly, it is essential for the United States to learn from past mistakes and establish a regulatory framework that encourages blockchain industry growth while maintaining its leadership in innovation and technology worldwide. According to my analysis, by embracing the emerging era of digital assets and maximizing blockchain technology, the nation can maintain its position as a leader in innovation and obtain the associated social and economic benefits.
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