#CryptoRoundTableRemarks

I am in favor of affording greater flexibility to market participants to self-custody crypto assets, especially where intermediation imposes unnecessary transaction costs or restricts the ability to engage in staking and other on-chain

Today’s roundtable is titled “DeFi and the American Spirit.” This is an apt title because the American values of economic liberty, private property rights, and innovation are in the DNA of the DeFi, or Decentralized Finance, movement.

Blockchains, of course, are a very creative and potentially revolutionary innovation that have us rethinking evidence of ownership and transfer of intellectual and economic property rights. They are shared databases that enable ownership of a type of digital property called crypto assets without reliance on an intermediary or central party. Instead, these peer-to-peer networks incorporate an economic mechanism to encourage participants to validate and maintain the database in accordance with the network’s rules. These are free market systems where users pay demand-based fees to network participants to have their transactions included within a so-called “block” of data with finite storage capacity.

The prior U.S. government administration discouraged Americans from participating in these market-based systems by asserting through lawsuits, speeches, regulation, and threatened regulatory action that participants and staking-as-a-service providers may be engaged in securities transactions. I am grateful to the Division of Corporation Finance staff for clarifying its view that voluntary participation in a proof-of-work or proof-of-stake network as a “miner,” “validator,” or “staking-as-a-service” provider is not within the scope of the federal securities laws.[2] As happy as I am over that step, it is not a duly promulgated rule with the force of law, so we cannot stop there. The Securities and Exchange Commission must adopt a regulation based on the authority that Congress has given us.