US Regulators’ Approach to Crypto Is Obstructing Innovation: Ex-Congressman

Former Republican Representative George Nethercutt championed cryptocurrency, but took aim at United States regulators’ approach to it in an article for political news outlet The Hill Jan. 14.

Nethercutt — who represented the U.S. state of Washington for ten years from 1995 — now serves as founder and chairman of Nethercutt Consulting LLC and of his nonprofit, the Nethercutt Civics Foundation.

Reviewing U.S. policy at home and abroad in his recent op-ed, Nethercutt drew a stark contrast between actions of the State Department to protect U.S. intellectual property and those of regulators.

“While diplomats at the State Department are negotiating hard to pave the way for American innovation, U.S. regulators such as the Securities and Exchange Commission (SEC) have been slow to make pronouncements regarding cryptocurrencies,” he wrote, continuing:

“This has hampered innovation and left many American businesses in regulatory limbo, particularly with respect to whether or not their tokens are classified as securities.”

The SEC continues to be a object of criticism from within the cryptocurrency industry. Its focus on targeting noncompliance among crypto companies using securities laws forged in the 1930s has led to claims that the organization is automatically placing cryptocurrencies at a disadvantage.

Confusion has also arisen from the overlapping activities of the agency together with U.S. regulator the Commodity Futures Trading Commission (CFTC). The CFTC’s chairman acknowledged in an interview last year that the two entities differed considerably in their approach to the same field.

For Nethercutt, however, it is securities in particular that should be divorced from the emerging crypto industry.

“From a legal perspective, experts have concluded that securities regulations simply do not apply to cryptocurrencies,” he continued:

“It’s time policymakers share that approach, allowing innovation to continue to flourish.”

In June, SEC officials publicly stated that neither Bitcoin (BTC) nor Ethereum (ETH) — at the time the two largest cryptocurrencies by market cap — were securities.