Responsible regulation underpins the future of the digital assets industry, and America’s innovative spirit. Yet, the crypto industry is still calling out for clarity as other countries embrace blockchain and digital assets. 

Ji Kim is General Counsel and Head of Global Policy for Digital Assets at the Crypto Council for Innovation, an alliance of global leaders in the digital assets space that lobbies governments for sensible crypto regulation. He said there’s a renewed interest in legislation, such as the McHenry-Thompson proposal, which provides a framework for digital asset regulation, which Kim said is a “thoughtful and constructive start, as it takes into consideration the inherent attributes of crypto and digital assets.”

Congress is realizing there are other jurisdictions, including Asia, the Middle East, Europe and the UK, that are creating appropriate rules and regulations that welcome digital assets.

“The U.S. has long led when it comes to responsible regulation, but if we continue to take too long when it comes to digital assets, there’s a real risk that other global jurisdictions become even more competitive and will lead,” said Kim, who previously served as general counsel and head of policy and regulatory affairs at the the crypto exchange Gemini. “Washington is continuing to determine how to best partner with industry, because ultimately if you welcome innovation, it creates commercial and job growth, while improving the lives of many.” 

Kim said there’s a strange misconception that firms in the digital assets space don’t want clear rules when it’s actually the opposite. 

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“You have firms in the crypto space, like Crypto Council for Innovation’s members, [that are] wanting clear rules of the road,” he said. “But in the U.S., at least, there’s been a serious lack of regulatory guidance as to how to do this.” 

The Crypto Council for Innovation believes that in order to develop smart legislation around the world, it’s important for regulators and policymakers to partner with industry. Kim would like to see continued bipartisan efforts across party lines, not regulation by enforcement at the agency level – which only creates more confusion and ultimately fails to further the SEC’s investor protection mandate. 

Movements at the state level 

Last month, Kim testified at the New York State’s legislative session, to respectfully oppose the Office of Attorney General CRPTO Act, which would effectively give them regulatory authority over this space. 

“It’s important to focus on how to best protect New Yorkers while encouraging responsible innovation and growth,” Kim said. “This legislation would have added an unnecessary duplicative layer on top of the existing New York Department Financial Services framework that has been in existence since 2015.” 

“At the New York assembly hearing, superintendent Harris explained that this would be unprecedented to have two regulators at the state level in the same space, and this would create more confusion for the markets,” Kim said. “There’s also a provision in that bill, where if you’re a digital assets firm, you and your affiliates cannot operate multiple lines of business.” 

That would imply that most of the existing DFS regulated firms with a BitLicense or trust charter would have to leave New York, because there would be no way for them to operate their existing business, he said. “We don’t see this type of stringent requirement in the traditional financial markets.” 

The CRPTO Act was not introduced last legislative session, which Kim believes is a sensible move.

There was a lot of activity at New York state’s past legislative session, with over a dozen bills considered that would affect digital assets and web3. Kim and the Crypto Council supported a bill that was passed relating to a New York state cryptocurrency and blockchain study task force. 

“Other states have enacted or are contemplating legislation too, but New York has long led when it comes to digital assets,” Kim said. “New York has made a lot of progress this past session.”