US Republican presidential candidate Vivek Ramaswamy introduced a crypto policy framework designed to protect elements of the Web3 space, including non-custodial digital currency wallets.
In a paper titled “The Three Freedoms of Crypto,” Ramaswamy urged regulators to scale back a significant portion of the SEC’s crypto rules.
The proposed framework, unveiled at the recent North American Blockchain Summit in Fort Worth, Texas, outlines a “safe harbor” exemption policy for newly introduced cryptocurrencies.
This exemption provides regulatory clarity, granting new cryptocurrencies protection from securities laws for a specified period after their launch and prohibiting any federal agency from establishing rules that would restrict the use of self-hosted wallets (crypto wallets not controlled by centralized exchanges).
Ramaswamy, known as the founder of Roivant Sciences, also criticized the sanctions against Tornado Cash, pledging to pursue bad actors rather than the code or its developers. Its crypto regulatory framework aims to significantly reduce the federal government and move crypto toward a clear regulatory structure that generally views tokens as commodities, not securities.
Ramaswamy’s policy framework is a response to the SEC’s current regulations on cryptocurrencies, which he considers a failure.
He argues that the rules of the road for cryptocurrencies should be clear and that Gary GenslerThe SEC should be able to instantly determine whether a widely used cryptocurrency or coin is a security or commodity.
Ramaswamy, so far the only candidate to take a strong stance on the subject of cryptocurrency, believes that regulation by application should essentially end and the rules should be clearly defined in advance.
He also wants to end what he considers unconstitutional regulations that Congress has not expressly directed federal agencies to have regulatory authority over.
In his discussion of financial autonomy, he characterizes the Bank Secrecy Act (BSA) and money laundering laws being developed in Congress as fundamentally unconstitutional. He explicitly promised that any regulations affecting self-hosted wallets would cease during his term.
Addressing the freedom to innovate without excessive regulation, Ramaswamy cited a important decision by the United States Supreme Court in West Virginia v. EPA (Environmental Protection Agency), claiming that the regulatory agency does not have the authority to control greenhouse gas emissions.
He went to mention that, if he were President of the United States, he would repeal any unconstitutional regulations that failed the Supreme Court’s test in West Virginia v. EPA, and plans a 75% reduction in the number of federal bureaucrats.
SEC and crypto
The United States Securities and Exchange Commission (SEC) has been actively involved in the regulation of cryptocurrencies, aiming to address the unique challenges posed by these digital assets. The SEC’s primary goal has been to enhance investor protection, promote stability, and improve transaction clarity in a rapidly evolving digital financial landscape.
Recently, the SEC accused Brian Armstrong’s Coinbase for operating as an unregistered securities exchange, broker-dealer and clearing agency. This allegation specifically focused on Coinbase’s involvement in an unregistered security offering through its staking-as-a-service program, which the regulator said deprived investors of substantial protections.
Despite widespread criticism, the SEC says its commitment to regulating cryptocurrencies aims to establish clear distinctions between traditional securities and crypto assets. This clarity is key to providing guidance to entrepreneurs and investors navigating the crypto space, ensuring they understand regulatory limitations.
The SEC says its regulatory approach is flexible, allowing the agency to adapt its tools to meet the unique characteristics and challenges presented by cryptocurrencies. In doing so, the SEC aims to strike a balance between promoting innovation, protecting investors’ interests and maintaining market stability.
It’s worth noting that the SEC’s regulatory approach has serious implications for potential Bitcoin exchange-traded funds (ETFs), as financial giants like Shades of greyBlackRock, Fidelity and many others have yet to gain approval.
These obstacles highlight the significant impact of regulatory decisions on major players in the cryptocurrency and financial sectors.
As cryptography and Web3 continue to evolve, governments in various jurisdictions are exploring solutions to emerging challenges related to the taxation of these assets. This effort aims to prevent potential tax revenue leakages and maintain the integrity of the tax system amid increasing adoption of digital currencies.