Why Congress Must Act: Clarity for Crypto and Consumer Protections

The Case for Clarity and Consumer Protections

Blockchain and digital assets aren't just technological advancements; they open doors to financial freedom, innovation, and economic empowerment. However, the lack of regulatory clarity has left innovators with uncertainty and consumers at risk. To unlock the potential of blockchain while safeguarding the public, Congress must create a framework that:

• Empowers Developers to Build. Developers need clear rights and pathways to create blockchain systems where users control their digital assets. Legislation must affirm their right to write code, publish software, and operate networks without unnecessary restrictions.

• Protects Consumers Through Choice. Consumers should have the right to manage their digital assets through self-custody tools, like hardware and software wallets, without relying on intermediaries. This ensures greater control and reduces the risks of centralized failures.

• Fosters Participation in the Blockchain Economy. Legislation must protect individuals' ability to engage in the blockchain ecosystem, whether by staking, running nodes, or performing peer-to-peer transactions. These foundational rights ensure that everyone—not just large institutions—can benefit from the blockchain economy.

• Creates Guardrails for Centralized Intermediaries. Centralized entities that custody customer funds, like exchanges, must be held to high standards of transparency, security, and accountability. Consumers should feel confident that their funds are safe without stifling innovation in decentralized systems.

The Guiding Principles for Crypto Legislation

For Congress to design effective legislation, it must balance fostering innovation and protecting the public. The framework should:

• Keep It Simple and Intuitive. Policymakers, developers and the public don’t need to be crypto experts to understand these rules. Legislation should be accessible and straightforward, avoiding unnecessary complexity.

• Minimize Disruption to Existing Frameworks. America’s financial regulatory system has served us well for decades. Instead of reinventing the wheel, crypto legislation should integrate seamlessly into these frameworks while carving out space for new technologies.

• Incentivize Innovation. Developers and businesses need clarity to thrive. Legislation must provide clear, actionable pathways for innovators to build in the U.S., achieve decentralization, and bring projects to market.

• Protect DeFi and Digital Commerce. Decentralized finance, smart contracts, and digital commerce platforms like NFTs are cutting-edge innovations that democratize finance and commerce by allowing individuals to transact directly with each other. Congress must ensure these areas remain free to develop without undue restrictions.

• Focus on Investor Protections. Consumer protections are critical, but overreach will only drive innovation offshore. Securities laws should address asymmetries where they exist, without stifling the development of decentralized systems that don’t fit traditional definitions.

Key Legislative Priorities

To provide clarity while protecting consumers, Congress should pass legislation that:

• Clearly Defines Tokens and Transactions. Builders, innovators, investors, and the 52 million Americans who own crypto need regulatory certainty. Congress should define digital assets clearly, distinguishing between securities, commodities, and other types of tokens, ensuring innovation can thrive while protecting investors and fostering market integrity.

• Grant the CFTC Spot Market Authority. Digital assets like Bitcoin and Ethereum are commodities, not securities. Legislation must empower the Commodity Futures Trading Commission (CFTC) to oversee the crypto spot market, ensuring transparency and protecting consumers from fraud and manipulation.

• Create SEC Rules for Capital Raising. Developers need clear pathways to raise capital for blockchain projects without every token being treated as a security. Congress should direct the Securities and Exchange Commission (SEC) to create rules allowing responsible fundraising while protecting investors.

• Establish a Stablecoin Framework. Stablecoins play a critical role in the digital economy by bridging crypto and fiat currencies. Legislation should ensure stablecoins are safe, fully backed, and transparent while fostering competition and innovation in the marketplace.

• Protect Decentralized Finance (DeFi) and Digital Commerce. DeFi protocols, smart contracts, and digital commerce platforms like NFTs must remain free from burdensome regulations. These areas of innovation are foundational to the blockchain ecosystem and should be explicitly carved out of regulatory overreach.

• Ensure Clarity for Centralized Entities. Centralized platforms that custody customer funds or assets should be regulated at the state or federal level to ensure accountability. This provides consumers with confidence while avoiding unnecessary interference in decentralized systems.

Why Congress Must Act Now

The risks of inaction are clear. Without regulatory clarity, the U.S. will continue to lose its edge in blockchain innovation. Developers and businesses will seek opportunities abroad, and consumers will remain vulnerable to fraud and systemic failures. Passing thoughtful legislation will:

• Protect consumers while empowering them to participate fully in the blockchain economy.

• Provide clear pathways for innovation, ensuring developers can build in the U.S. with confidence.

• Solidify America’s leadership in blockchain technology and the global digital economy.

This is about more than regulating a new technology—it’s about securing America’s future in a rapidly evolving digital landscape. Let's seize this opportunity to create a legal framework that fosters innovation, protects consumers, and ensures the benefits of blockchain technology are shared by all.