Transforming the United States into a Global Crypto Hub

Dear President-Elect Trump, In your address at the Bitcoin conference in Nashville, you expressed a commitment to making the United States the world's crypto capital if re-elected. As practicing members of the crypto law bar, we are writing to recommend regulatory policies that can help achieve this goal. The United States, founded on principles of personal liberty that align with the ethos of crypto, is naturally positioned to lead the world in crypto development. Unfortunately, U.S. regulators have been slow to adapt existing laws to digital assets and blockchains, creating an unfavorable business environment that has driven many entrepreneurs and developers abroad. To unlock American ingenuity and address the neglect of the blockchain industry, we propose forward-looking policies across three key areas: supporting U.S. companies, promoting crypto values such as privacy, disintermediation, and decentralization, and cultivating a favorable domestic business environment. Supporting U.S.-Based Businesses The crypto industry encompasses a wide range of established and emerging use cases, including digital gold, stablecoins, permissionless payments, decentralized finance, real-world assets, and decentralized physical infrastructure. Many of these are being developed responsibly in the United States by businesses like Coinbase, Circle, and Consensys, as well as by developers contributing to crypto's open-source, decentralized infrastructure. To compete effectively against international rivals, these entities need clear regulatory guidelines and proper oversight. General Rules of the Road Token issuance and secondary sales are central to the crypto economy but are subject to confusing and overlapping regulatory authority from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Legislation should clearly define the scope of jurisdiction among primary regulators and outline when assets enter and exit that jurisdiction. Congress should avoid giving U.S. securities laws an overly broad application, as the SEC has done. Tokens powered by open-source software and consensus mechanisms that are minimally dependent on centralized actors are not securities because there is no legal relationship between token owners and an 'issuer' as understood by securities laws. Similarly, crypto assets such as art NFTs and non-investment activities like staking and lending bitcoin fall outside securities laws. Congress should be bold, not bound by prior legislative efforts with unintended consequences, and should leverage the regulatory experience of other nations while charting a unique path forward for the United States. Specific Sectors Besides advocating for general rules, your administration should urge Congress and relevant agencies to address specific sectors due to their strategic importance to the crypto industry and the nation. Stablecoins, with a current market cap exceeding $200 billion, are the lifeblood of the digital asset ecosystem. They warrant comprehensive legislation for their issuance and management, ensuring they are transparently backed and do not threaten financial stability. Regulatory support of stablecoins benefits consumers and furthers national interests by reinforcing the dollar's status as the global reserve currency and increasing demand for U.S. treasuries. Traditional Finance Integration The success of Bitcoin and Ethereum ETFs demonstrates that crypto has begun integrating with traditional finance. Regulatory policy should ensure safe and orderly integration by giving consumers access to trusted custody services, which may involve amending or rescinding prejudicial SEC accounting guidelines and custody rules. Pro-innovation policy should also promote the tokenization of securities representing traditional financial assets like stocks, bonds, or real estate as blockchain-based tokens, leading to improved liquidity, fractional ownership, and faster settlement, which would strengthen U.S. capital markets. Decentralized Finance (DeFi) has the potential to modernize the global financial system and return value to ordinary Americans by removing costly financial intermediaries. Your administration should not allow entrenched interests and alarmism to stop the United States from becoming the world's leader in DeFi. Regulations aimed at centralized actors must be crafted to avoid inadvertently capturing and paralyzing the nascent DeFi ecosystem. Fostering Innovation through a Commitment to Crypto Values Regulatory policy must respect crypto values, including privacy, disintermediation, and decentralization. Two key principles arise from this commitment: regulation should not impose greater burdens on crypto where traditional analogs exist, and regulation should evolve where traditional analogs are absent. When to Treat Crypto the Same as Traditional Assets Products like self-custody wallets, which enable users to hold and manage their own private keys, should not be treated differently than physical wallets used for personal asset management. The same logic applies to the taxation of block rewards; Americans mining or validating blockchain transactions are creating new property, similar to farmers growing crops, and should not be taxed differently. When to Treat Crypto Differently Regulators should resist placing crypto actors and activities into legacy frameworks incompatible with crypto, as this damages the ecosystem, pushes the industry abroad, and erodes the Rule of Law. Unfortunately, many U.S. regulators have chosen this path. Instead of regulating digital asset and blockchain businesses like traditional companies, regulators should collaborate with this new technological paradigm and the industry. This could involve leveraging blockchain-based credentials for government surveillance in decentralized environments, which are portable, give users control of their data, and are aligned with the frictionless blockchain ecosystem. Attracting Top Talent with a Welcoming Business Environment To become the leading destination for top crypto talent, the U.S. must cultivate a favorable business environment. Your administration can start this process immediately. End the de-banking of crypto companies by directing the FDIC and other agencies to cease their campaign aimed at de-banking the crypto industry. Improve SEC rule-making and enforcement by instructing the SEC chair to overhaul the agency's approach to crypto, focusing on preventing fraud rather than curbing financial speculation. Roll back punitive tax rules that push entrepreneurs and developers abroad, such as adopting current expensing for software development, tax deferral for validation rewards and airdrops, and a safe harbor for de minimis consumptive transactions. Reduce unnecessary red tape by simplifying or eliminating registration and reporting requirements for digital asset offerings that meet certain conditions, and consider legislating a unified federal framework for money transmission licensing. In pursuing these policies, we encourage your administration to consult with industry leaders and remain sensitive to the transnational scope of the digital asset ecosystem. Leveraging devices like regulatory sandboxes can limit the risk of unintended regulatory consequences. The time is ripe for the United States to assert its global regulatory leadership, contributing to the country's future economic prosperity and endorsing a technology that rests on deeply held American values and freedoms. Sincerely, Ivo Entchev, Olta Andoni, Stephen Rutenberg, Donna Redel