Blockchain technology has exploded in recent years, bringing innovative new solutions across industries. However, in the US, legislation regulating these technologies has failed to keep up. Andrea Perlak, an accounting firm owner specializing in blockchain, argues the sluggish pace of regulation is causing an exodus of companies from the US and putting the country at a competitive disadvantage.
SEC’s Fear-Inducing Enforcement
According to Andrea, perhaps the most alarming consequence of the legislative gaps is the SEC’s aggressive targeting of blockchain companies and even individuals without legislative clarity in place. “Last week, a congressional hearing titled ‘Dazed and Confused: Breaking Down the SEC’s Politized Approach to Digital Assets’ was held. There is widespread acknowledgment within the industry that the SEC is taking a politicized approach to enforcement, and Congress agrees.”
Andrea noted the aggressive enforcement is creating real fear. “Large Web3 organizations with vast resources are having trouble complying with the sometimes nonsensical or contradictory regulations in the U.S. In an industry composed mostly of start-ups, compliance is extraordinarily challenging. Couple these real-world challenges with the anxiety of random SEC actions; it is enough to scare many innovative founders out of the states.
Global Embrace of Blockchain
While the SEC has taken an antagonistic stance, Andrea pointed out other countries are actively embracing blockchain. She cited El Salvador adopting bitcoin as a legal tender in 2021. This led to dramatic improvements in safety as gang violence plummeted. “El Salvador has vastly improved after making bitcoin their legal tender despite their decades-long political and economic challenges,” Andrea said.
Countries across the globe are adopting legislative solutions to Web3 and crypto. Major European countries have developed regulatory frameworks like MiCA, the E.A.U. is becoming a global Digital Assets start-up hub, and Singapore is encouraging Web3 innovation.
Regulatory Gaps Due to Lack of Expertise
When asked why the legislative gap exists, Andrea cited the lack of blockchain and tech expertise in Congress. She recounted trying to explain technical details to Congressional members. “Many members view crypto as a trading or investment asset. Of course, the Web3 universe is much larger than Bitcoin mining and FTX. Blockchain companies are complex and it is hard for even industry experts to keep abreast of this tech. It is a monumental hurdle to adequately explain to the legislative branch what appropriate regulations should be and why, what is possible, and how to decrease risk for consumers.”
She argued Congress must work much harder to keep pace with industry. This is moving much faster than previous technologies like the early internet. “We have been told that the government works on its own schedule, so we should just be patient,” Andrea said. “In this case, many of us fear that it will simply be too late.”
Need for Government and Industry Collaboration
Andrea advocated for collaboration between government and industry experts who understand blockchain tech and can keep pace with innovation. “In order for collaboration to be successful, regulation through enforcement must cease and desist,” she argued. With a change in the SEC approach, a true collaboration between industry and government, there is a chance that we could catch the United States up,” she said.
Radical Legislative Changes Needed
In Andrea’s view, nothing short of “radical innovation of legislation specific to new tech that keeps pace with the innovation” will suffice if the US hopes to retain high-tech industries and innovators. She also called for an overhaul of the IRS taxation system, which is outdated for digital asset accounting.
On the urgency required, Andrea insisted, “government regs must match the pace of tech, not the other way around.” She said some believe it’s already too late for the US to catch up after tech companies began their exodus around 18 months ago. But Andrea struck a somewhat optimistic note by saying if the government partners with industry experts, they could potentially still turn the tide.
Andrea Perlak offers an insider perspective on blockchain’s rapid growth and the policy failures creating an innovation exodus from the US. Her frank descriptions illustrate the fear among professionals simply trying to navigate regulatory uncertainty. To learn more about Andrea Perlak and her approach, you can check out her LinkedIn profile.
