Crypto Regulation: SEC's Purgatory, Industry Urges Engagement

Crypto regulation and legislation were prominent topics at the recent Ondo Summit in Manhattan, with speakers acknowledging the significant work ahead. Former Congress member Patrick McHenry praised Paul Atkins as a "great choice for SEC chair," but emphasized the lengthy confirmation process, potentially leaving the SEC in a "purgatorial state." McHenry also highlighted the arduous journey of drafting and passing legislation, which could take up to 18 months.

Engagement with Washington is now encouraged, according to McHenry, with positive indicators such as the midterm elections and key appointments. Franklin Templeton's Sandy Kaul, who leads a team creating FAQ materials and presentations for regulators, stressed the importance of taking regulators on a journey and leveraging trust to move forward.

CFTC Acting Chair Caroline Pham discussed the agency's near-term deadlines and plans to hire crypto market structure experts as senior advisers. She also revealed an upcoming CEO forum with Circle, Coinbase, Crypto.com, and Ripple to discuss tokenized non-cash collateral. Pham urged the industry to approach regulation with a reasonable approach to close the credibility gap created by fraudsters.

Pantera Capital founder Dan Morehead noted the industry's cautious excitement about the new era of engagement, while McHenry emphasized the importance of taking advantage of the current momentum. He warned that missing the 18- to 20-month window for positive legislative or regulatory action could lead to a worse outcome and drive people overseas.