Engage now, or forever hold your peace

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It wasn’t exactly surprising to hear speakers at yesterday’s Ondo Summit in Manhattan opine on crypto regulation/legislation. 

But beyond the post-election optimism we’ve heard plenty of, there was clear recognition of the ample work to do.

Former Congress member Patrick McHenry called Paul Atkins a “great choice for SEC chair.” But finalizing confirmations like his can be a months-long process, McHenry noted. Hence the potential “purgatorial state” of the SEC, if you recall from last week’s Forward Guidance.

Another months-long process: the “arduous” journey to draft and pass legislation, McHenry added. There’re hearings before lawmakers start to craft a bill. Then, getting it out of committee and bringing it to the floor. If passed in the House, it’s off to the Senate, which McHenry called “a completely different beast.”

At “breakneck speed,” a crypto bill could be signed on July 4.

“Or it could take 18 months,” he noted. 

Beyond timelines, McHenry encouraged the industry to engage with the folks in Washington. It’s now safe to do so, he argued — with the end of SAB 121 and Hester Peirce’s plans as key indicators.

Franklin Templeton’s Sandy Kaul knows all about engagement. Her firm has a whole team that does nothing but create FAQ materials and presentations for regulators.

“On one hand you’ve got to go very quick and be very open-minded and be very willing to disrupt yourself,” Kaul said during one panel. “On the other side, you really need to take the regulators on a journey with you and use your reputation as someone they trust to get them comfortable that it’s OK to move forward.”

CFTC Acting Chair Caroline Pham had her own fireside chat at the event. She noted the near-term deadlines laid out in Donald Trump’s executive order that the agency is working to meet. Pham mentioned, too, that the CFTC plans to bring aboard “crypto market structure experts” as senior advisers. 

The derivatives regulator today revealed an upcoming CEO forum (with Circle, Coinbase, Crypto.com and Ripple) to discuss the agency’s pilot program for tokenized non-cash collateral.

When asked how the industry can avoid squandering this opportunity for clarity, Pham urged sector players to come in with a “reasonable approach.” This will help close an unfortunate “credibility gap” spurred by some of the space’s fraudsters, she argued. 

Pantera Capital founder Dan Morehead said in a separate panel the industry is still getting used to the friendlier invitations to engage. 

“The rebels just threw the gates open, the sun’s beaming in and we’re all just still sitting there too afraid to be excited that it’s a new era,” Morehead mused.

But people shouldn’t be scared, McHenry stressed. And it’s key for the industry to take advantage of the momentum now.

“If we’re going to get something positive out of legislative or regulatory action, it will happen in the next 18 to 20 months,” he said. “That is open-field running; and if we miss this window, we’re going to be much worse off and we’re going to see people go back overseas.”

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