Kraken’s CLO Takes a Stand in Landmark Joint Hearing on Crypto Regulation

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As Congress prepares to hold a historic joint hearing on creating new rules tailored to the crypto industry, the ongoing regulatory crackdown has raised concerns about the future of this rapidly growing sector. Marco Santori, Chief Legal Officer of Kraken and an expert in blockchain and cryptocurrency law, provided valuable insight into the need for clear and consistent regulation to foster innovation and protect investors.

Kraken CLO Demands Balanced Crypto Regulation

In a recent tweet, Santori highlighted the untenable situation in the United States, noting that other countries are moving forward with clear and consistent regulations that enable innovation while protecting consumers. He highlighted the need for US regulators to take a more proactive approach to crypto, creating a regulatory framework adaptable to the ever-changing nature of the industry.

1/ Tomorrow, Congress will hold a historic joint hearing between the agricultural and financial services committees on creating new rules suitable for crypto.

I will testify live.

— Marco Santori (@msantoriESQ) May 9, 2023

Santori’s call for new laws differs significantly from his previous position. As a longtime advocate of self-regulation within the industry, he has never advocated for new laws before. However, he believes that the current regulatory environment in the United States is hindering industry growth and putting American companies at a disadvantage compared to their international counterparts.

Santori suggests that taking a more collaborative approach is one way to improve how regulators interact with crypto. Rather than viewing regulators as adversaries, he believes greater engagement between regulators and industry can lead to better outcomes for everyone involved. This includes developing clearer compliance guidelines, educating regulators on the unique aspects of the industry, and promoting innovation through responsible regulation.

Additionally, Santori pointed out that the current environment of endless litigation is hurting companies like Kraken and failing to protect consumers. The lack of clear and consistent regulations can make it difficult for businesses to plan for the future, invest, hire or allocate time effectively.

Santori believes that Congress is important in improving the regulatory environment for the cryptocurrency industry. By providing regulators with the tools and resources they need to effectively oversee the industry, Congress can help foster innovation while ensuring consumer protection.

Former CFTC Chairman to Testify at Congressional Hearing

Former Commodity Futures Trading Commission Chairman Timothy Massad is expected to testify before Congress tomorrow on the need for stronger regulation of digital assets. In his prepared statement, Massad pointed to gaps in spot market regulation of crypto tokens that are not securities, such as Bitcoin. He pointed out that this gap still exists and is complicated by the ongoing debate over the classification of digital assets.

Massad urged Congress to fill this gap, suggesting that there are essentially two paths to take. He believes that one way is preferable and will explain it tomorrow in his testimony.

Massad also pointed to the lack of clarity in the rules to resolve whether digital assets are securities or commodities. Trading and lending platforms claim they only deal in tokens that are not securities, thereby avoiding direct federal oversight.

As a result, investor protection on crypto trading and lending platforms is inadequate. The failures of trading platform FTX, crypto lender Celsius, stablecoin Terra/Luna and others last year led to losses for hundreds of thousands of investors.

The joint hearing is important in ongoing efforts to create a clear and consistent regulatory framework for the cryptocurrency industry. The insights and recommendations provided by Santori and Massad will be closely watched by industry players and policy makers and are expected to have a significant impact on future regulatory decisions.

BTC is trading sideways on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

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