A recent panel discussion with industry thought leaders from the digital asset industry took place at Sullivan & Worcester LLP in New York City. Panel moderator included Joel Telpner, partner at Sullivan & Worcestor LLP, who made three bold predictions concerning the future of digital asset regulation.
How Digital Asset Regulation is Currently Transitioning
The panel was titled “Token Exchanges: The promise of liquidity, compliance and stability”.
Panel moderator was Joel Telpner, partner at Sullivan & Worcestor’s New York office, and head of its fintech and blockchain practice.
Participants included Dan Truque, head of alternative assets at Symbiont; Wilfred Daye, head of financial markets at OKCoin; and Evan Malanga, director of business development at Securitize.
Telpner’s opening remarks suggested the digital asset industry is currently at the ‘trough of disillusionment’ stage of a standard hype cycle.
“We’re all collectively paying the price at the moment, but it’s important to keep in mind that this is not a bad thing. Most all new forms of technology have experienced a high level of unreasonable exuberance in the early days and after that period, business becomes much more stable.”
Additional remarks from Telpner implied the digital asset industry is on the verge of entering a new stage:
“We’re at the end of the beginning. This is about moving from the wild, wild, west to a more mature level of the digital currency space and tokens. Those that remain have to work hard and understand that success will come from fundamental principles in business and governance, and it will certainly pay off.”
Joel Telpner’s Forecast on the Future of Digital Asset Regulation Explained
Telpner’s ‘wild wild west’ where companies crowdfunded millions of dollars without any regulatory concern has certainly dwindled.
Regulatory enforcement of various laws and regulations— including those applicable to securities— have entered the realm. Initial Coin Offerings (ICOs) have in large part dissolved due to regulatory worries.
Instead, companies have turned to the Security Token Offering (STO) as a compliant means of utilizing the blockchain to raise capital.
With such a regulatory landscape in mind, Telpner made three bold predictions while leading panel discussion:
- We should expect to see clarification from the SEC regarding which digital assets constitute securities in the near-future. While most believe the US is behind when it comes to digital asset regulation, Telpner disagrees. Instead, Telpner believes the SEC will soon provide further guidance and clarity when it comes to digital asset regulation. Telpner may be on to something here, as the SEC’s FinHub continues to facilitate dialogue with the industry. In addition, SEC Chairman Jay Clayton has recently stated that Ethereum is not a security. However, Clayton has historically argued that virtually every ICO he has seen constitutes a securities offering, with his stark response explaining how he is “not going to change rules just to fit a technology”.
- The Commodity Futures Trading Commission (CFTC) will become more active in the space. Telpner is of the belief that most tokens are likely to be classified as commodities. Recent news corroborates Telpner’s prediction here, as the CFTC recently charged 1pool and its CEO with nearly $1,000,000 in fines and penalties. The commission said other enterprises in the space should take notice, as others who fail to comply with the appropriate regulations will be held accountable.
- A regulatory focus on stablecoins will soon emerge. Telpner described how Stablecoins are neither commodities nor securities, according to industry thought leaders. How they ought to be regulated is currently ambiguous, and methods of regulation are likely to be hashed out in the near future.
What do you think of Telpner’s predictions on the future of digital asset regulation? Do you agree or disagree? Let us know what you think in the comments section below.
Image courtesy of Intralinks.