Navigating Regulatory Waters: Crypto’s Path to Conformity | by Rev Cynthia Pustelak Safeth Ministries | Coinmonks | Oct, 2023


Navigating Regulatory Waters: Crypto’s Path to Conformity

In the dynamic realm of cryptocurrency, the regulatory landscape often poses a significant challenge. As discussions around crypto regulations continue, there’s a prevailing expectation that the U.S. Securities and Exchange Commission (@SECGov) would create specialized rules for the crypto industry. However, a closer examination suggests a different narrative.

Brian Armstrong, CEO of Coinbase (@brian_armstrong), stands in his perspective, suggesting that the SEC would need to craft specific regulations for the crypto space. Contrary to this view, historical patterns and the SEC’s traditional role point toward a more conventional approach.

The SEC traditionally engages with publicly traded companies, overseeing compliance, disclosure, and investor protection. When it comes to cryptocurrencies, the prevailing sentiment is that the industry will likely align with existing regulatory structures. Two prominent models emerge: one resembling a traded financial instrument and another, exemplified by #RetailTokens by Safeth, which holds a unique position in the crypto ecosystem.

1. **Traded Financial Instrument Model:**
– *Characteristics:* In this model, cryptocurrencies are treated as traded financial instruments, potentially subject to existing regulatory frameworks.
– *Expectations:* If the SEC were to regulate crypto under this model, it would involve compliance with rules designed for securities and financial instruments.

2. **Retail Token Model by Safeth:**
– *Characteristics:* Safeth’s #RetailTokens present an alternative. Not classified as securities or digital assets, and not traded on exchanges, these tokens operate under a unique paradigm.
– *Distinguishing Features:* Safeth’s model avoids investor funding and establishes product pricing through Manufacturer’s Suggested Retail Price (MSRP) rather than conventional exchange-based bids and offers.

**Navigating the Regulatory Landscape:**
The key lies in recognizing that the SEC, historically, operates within the sphere of publicly traded entities. While discussions around crypto-specific regulations persist, the likelihood of the SEC creating bespoke rules for the entire crypto industry seems improbable.

Crypto projects might be compelled to adapt to existing regulatory structures. This could involve meeting the criteria of traded financial instruments, adhering to securities regulations, and ensuring compliance with investor protection measures.

Safeth’s #RetailTokens, however, introduce a compelling alternative. By eschewing traditional classifications, these tokens embody a model that is not easily pigeonholed into existing regulatory frameworks. The absence of investor funding, non-tradability on exchanges, and reliance on MSRP for pricing offer a distinct pathway.

The future regulatory landscape for crypto remains uncertain, but historical precedents suggest a likelihood of alignment with existing structures. The SEC’s focus on publicly traded entities emphasizes the need for adaptation within established frameworks. However, models like Safeth’s #RetailTokens showcase the potential for innovative paradigms that don’t neatly fit into traditional regulatory boxes.

As the crypto industry evolves, a nuanced and adaptive approach to regulation becomes paramount. The journey toward conformity might involve a delicate balance between traditional expectations and the innovative spirit that defines the crypto space.

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