Crypto Industry Awaits U.S. Regulation For Global Maturation

The crypto industry has been eagerly awaiting U.S. regulation as the final major step in its global maturation. TuongVy Le, a seasoned compliance expert and former Securities and Exchange Commission lawyer, argues that the regulations being developed by Congress and regulators are not just for the current digital assets space but are foundational for the future financial system.

Le, who has held key legal and regulatory positions at Anchorage Digital, Bain Capital, and the former Worldcoin, believes that the new rules will eventually govern the core of the financial markets. She envisions a future where securities and commodities transactions in traditional finance are migrated onto the blockchain, replacing the lengthy clearing and settlement processes that have been in place for decades.

"The crypto-tradfi convergence has already started," Le said in an interview. She further elaborated on these ideas in a paper published with New York University's Austin Campbell. "Once market structure and stablecoin legislation is passed, it's really going to take off. Honestly, it can be hard to realize you're undergoing a real transformation as it's happening, but I think we'll look back on this the way we looked at the internet and how it fundamentally changed how we communicate and interact as a society."

Le is optimistic about the changes made by congressional lawmakers in the latest discussion draft of the market-structure bill, which builds on the previous session's Financial Innovation and Technology for the 21st Century Act. She praises the bill's approach to integrating various types of transactions under single trading platforms and its recognition of blockchain maturity.

She believes that the current legislation in Congress will be a significant breakthrough for the industry. U.S. financial agencies, including the SEC and Commodity Futures Trading Commission, are already recognizing the potential of blockchain technology to create a better architecture for capital markets. "The question is, how can we start to incorporate that capital technology in a way that makes markets more efficient and transparent and fair?" Le said.

Le's experience in enforcement cases at the SEC has shown her that many issues involving broker misconduct, market manipulation, and fraudulent reporting could have been prevented with live and transparent transactions and fewer intermediaries. She emphasizes that regulatory clarity is crucial for the industry, not just to avoid enforcement actions but also to distinguish between good and bad actors.

"Sometimes the clarity is more important than what the laws actually say, because businesses will find a way to work with that," she noted. Le expects that U.S. lawmakers will allocate new resources for market regulators as they take on crypto oversight, but these agencies will also need to expand their expertise. "You can't regulate what you don't understand," she said, highlighting the need for better resourcing, particularly for the CFTC, which is set to gain authority over crypto spot markets.

Despite some political setbacks, crypto legislation remains a top priority on Capitol Hill. Le believes that if the legislation is crafted correctly, it could unleash a golden age of financial innovation. "The wind is really at the industry's back right now," she said, expressing optimism about the future of the crypto industry under the new regulatory framework.