A fintech advisory group has recently been launched by the Commonwealth of Massachusettes, the office that supervises the chief securities regulator in the state. According to a March 7 report by American Banker, the initiative has been made in an apparent effort to clear up some of the state’s murky regulations surrounding cryptocurrency.
William Gavin, the Secretary who is in charge of the group, selected its members from blockchain firm ‘Arwen,’ the Eastern Bank in Boston, as well as a number of academics and legal experts, and individuals from other firms and institutions.
”Enforcement is Fine, but We First Need to Know What the Rules Are”
Gavin believes that including individuals from a wide array of different parts of the financial sector is key to its success. “This working group includes key players from a broad spectrum of the fintech community, ranging from innovation hubs to startups to financial institutions,” he explained. “This collaboration will help advise securities regulators on meeting the novel demands of this rapidly growing space.”
And indeed, the inclusion of individuals from the cryptocurrency community is a sign that Gavin’s goal is to create regulations that support–rather than hinder–the crypto industry.
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“I personally wouldn’t be doing this if all that was going to come out of it was more enforcement action,” said Arwen CEO Sharon Goldberg to American Banker. “Enforcement actions are fine, but we first need to know what the rules are.”
Massachusettes Has a Reputation for Hostility Toward the Crypto Industry
Indeed, the lack of clarity in Massachusette’s cryptocurrency regulations has caused quite a bit of grief for crypto companies in the state. Chair of the broker-dealer practice at Lowenstein Sandler Ethan Silver explained that at the present moment, cryptocurrency companies operating in the state take great pains to ensure that they are not breaking any laws accidentally, including hiring teams of lawyers and consultants.
While the expense associated with hiring top-tier legal teams may be par for the course for established companies, the cost can be too high for startups and smaller firms entering into the crypto space.
And truly, crypto firms have much to lose if they don’t dance every step of the legal shuffle–in March of last year, Gavin himself issued consent orders to five crypto companies that demanded that they “permanently suspend” their ICOs. The Massachusettes securities division also ordered the firms to send rescission letters and to refund investors within 45 days.
These actions, in addition to other legal issues, earned Massachusettes a reputation for being hostile toward crypto companies. However, if the formation of the working group results in greater clarity and supportive legislation, that could change.