The Blockchain Association’s members span the breadth of crypto from exchanges to investment funds, analytics firms and decentralized finance protocols, yet they all have one common concern: the U.S. Securities and Exchange Commission.

The SEC, led by Chairman Gary Gensler, has consistently said that digital assets need more regulation to combat its view that there’s a lack of customer protections across the market. Gensler has invited crypto executives and others in the industry to come talk to the SEC, yet that appeared to blow up in the agency’s face last year. Coinbase CEO Brian Armstrong wrote on Twitter that the SEC threated to sue the company over its plan to allow customers to lend their crypto to earn interest. He said the agency was unresponsive to its questions and gave no reasoning for its decision. Suffice it to say, there is a similar distrust of the SEC across much of the crypto community.

5/ They responded by telling us this lend feature is a security. Ok - seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view. We always make an effort to work proactively with regulators, and keep an open mind.

— Brian Armstrong - barmstrong.eth (@brian_armstrong) September 8, 2021

Kristin Smith, the executive director of the Blockchain Association, which has over 80 members, said there is a general fear among them of how the SEC has operated related to web3 and defi protocols.

“They worry that they will be a victim of regulation by enforcement,” Smith said. The SEC didn’t respond to a request for comment. The association’s members include Ava Labs, Blockdaemon, BlockFi, Chainalysis, Compound, Kraken, Polychain Capital and Union Square Ventures.

Smith said the association is working more closely with the Commodity Futures Trading Commission, the main U.S. derivatives regulator, due to its willingness to engage with the industry and study the new issues crypto raises for financial oversight.

In one example, the crypto exchange FTX will have an informal hearing before the CFTC and testify to Congress over its application to guarantee crypto derivative trades on its platform. The SEC isn’t open to that type of engagement, Smith said. There are no direct talks with the SEC or Gensler at the moment, Smith said.

“We have a lot of other folks who are interested in having conversations, so right now we’re primarily focused on Congress,” she said.

Read More: Gensler written testimony to Congress from Oct., 2021

One concern is a part of the infrastructure bill passed by Congress last year that could require digital asset transfers over $10,000 to be reported to the government in the same way cash transactions are. The new rules could even require the recipient of the crypto to report the identity of the person who sent the assets. The Treasury Department and Internal Revenue Service will craft the rules in a joint process. Smith is confident that a good outcome can be achieved for the industry.

“There are several issues,” she said. “The primary one is, ‘what is the definition of a broker?’ Because if you’re a broker you have to do information reporting.” She hopes the broad nature of that broker definition means an exemption from reporting requirement can be obtained for cryptocurrency miners, people who stake their digital assets and hardware and software wallet operators. Then there’s the question of what happens if a smart contract – a bunch of code, basically – send you more than $10,000 in crypto. How does one report the identity there?

“Given the grass-roots politics of this, [Treasury and the IRS] have some flexibility and I think we can get them to have a more-narrow interpretation,” Smith said.

In other areas, the Blockchain Association is working to block a bill in New York state that would ban proof-of-work mining; the intersection of securities and commodities law; stablecoin regulation; tax policy; and crypto’s use in illicit finance, Smith said. As for partners on that agenda, it doesn’t look like-- for the moment, at least – that the SEC will be there, while the CFTC will.

The CFTC “is just better suited to be the regulator, we think,” Smith said.