Not every government official across the globe contends that cryptocurrencies are the scourge of the earth. In fact, there are many of those in and out of authority that have spoken out from time to time in support of digital currencies and have been critical of government agencies that are stifling innovation. One such individual is a former Republican Congressman in the United States, George Nethercutt, who served for ten years before departing government service in 2005. He currently runs his own consulting firm and is a supporter of the new digital currency space.
Nethercutt’s critical remarks are targeted at the SEC, which has come down hard on Initial Coin Offerings (ICOs) and any other coin that was not Bitcoin or Ethereum, claiming each was a security and subject to strict registration and disclosure regs on the books. He is of a mind that laws created back in the 1930’s are totally outdated when it comes to crytocurrencies. To assume otherwise borders on resisting change and demonstrates a reluctance to promote progress in a vital sector of our economy. His chief complaint is that:
The SEC is not fostering technological development in any way.
He also noted:
From a legal perspective, experts have concluded that securities regulations simply do not apply to cryptocurrencies. Cryptocurrencies and the underlying blockchain technology should be neither feared nor dismissed. While certain bad actors may be taking advantage of crypto in the short term, they represent a tiny fraction of the total users and applications of these technologies. These innovations shouldn’t be hijacked by others, nor should they be strangled by poorly considered regulation.
Nethercutt’s fear is that the momentum that accompanies innovative creativity cannot be dampened on a regional basis. Funding, intellectual capital, and the jobs that evolve from these activities will easily migrate elsewhere to more receptive locales. One need only recall stem cell research a little over a decade ago. Resistance to this new technology resulted in a brain and capital drain. Major centers for development sprung to life in Singapore and other parts of Asia almost instantly, never to return.
In the U.S., the SEC has made good on its threats, shutting down the operations of a number of high-profile ICOs and proceeding with incarcerations and heavy fines. The confusion has created a type of “legal limbo”, where planned offerings have had to delay or move offshore. As with stem cells, there are more receptive environments for ICOs in Switzerland and Asia. Without regulatory oversight, there still may have been “bad actors” in this space, but the current forecast going forward is that ICOs will slowing convert to becoming “STOs” or Security Token Offerings, a step in the right direction, but in other jurisdictions, just the same.
Nethercutt is not alone in his rebukes of the SEC. Several other Republican lawmakers have pointed fingers at the SEC, as well, for similar reasons. Darren Soto, a Democrat Congressman from Florida, has suggested that the SEC is off limits, except in those cases where the token is a “true security”. The inconsistency is exacerbated more broadly, when taking into account that another regulatory body, the Commodity Futures Trading Commission (CFTC), regards cryptos as commodities or currencies.