No New Regulator Needed to Have Better Crypto Regulation – CoinDesk

Most crypto firms complain there are too many regulatory bodies globally and particularly in the U.S., and protest that this overlapping and even contradictory regulation stymies growth and innovation. The “alphabet soup” of U.S. federal regulatory bodies – the SEC, CFTC, DOJ, FDIC, FTC and IRS, to name a few – is just the beginning.

At the state level, there are 50 attorneys general to contend with, not to mention the various state agencies and regulators that enforce the myriad of laws passed by state legislatures and applied by the courts. Digital currency has no borders, and while regulators do, they can extend their regulatory reach if markets, consumers and institutions in their jurisdictions are impacted.

Some crypto startups and fintech leaders have advocated for a new regulatory body that would supersede these myriad of regulators, as a way to streamline regulatory compliance and reduce overlap between competing agencies. The Financial Conduct Authority (FCA), in the U.K., is frequently cited as an example of a central superseding agency that recognizes and promotes innovation through its policies, and many have advocated for a parallel agency in the U.S. Some fintech leaders have even threatened to leave the U.S. entirely, and relocate to friendlier regulatory regimes in the U.K. or elsewhere.

No question, it is painful and costly today for young crypto startups and even mature fintechs to navigate the matrix of federal and state regulations. But despite the seemingly chaotic and burdensome regulatory structure, the U.S. system provides confidence to both investors and consumers.

This approach to regulation of digital assets allows innovation to flourish by preventing fraud, unhealthy speculation and asset bubbles. To spark innovation and stay competitive with other international markets, U.S. regulators need to reduce “grey areas” so more fintechs and entrepreneurs can clearly navigate the rules of the road. The problem is not the many regulators in the U.S. but rather this lack of clarity and overlapping regulations.

The many U.S. regulatory bodies are creatures of different laws that were passed in response to different national crises – the Office of the Comptroller of the Currency (OCC) was integral to the development of a national banking system to finance the Civil War, the Securities and Exchange Commission (SEC) and Federal Deposit Insurance Commission (FDIC) were established in the wake of the Great Depression, and the Financial Stability Oversight Council was part of the reforms under the Dodd-Frank Act. What has been inherited is a complex regulatory landscape with…