As part of CoinDesk's State of Crypto Week, presented by Chainalysis, Multicoin Capital general counsel Gregory Xethalis discusses the current regulatory landscape crypto firms are facing and what the priorities should be for the regulators across the U.S. "I don't think it's a panacea to have regulation," Xethalis said.
You're not going to have huge leverage perks that some people want on a US regulated exchange that's not happening in the near term. And there are some people who will be drawn to that, there will be listing standards that are different for exchanges that are global than are in the US. But there is something to be said for uh the the soundness and regulatory certainty and the lack of certainty makes it more difficult for people to invest and build in the US and build compelling products. We have seen uh a handful of us entities have success, building products. Coinbase, Coinbase being perhaps the best example, but we've also seen success from uh Gemini and Paxos in building good product that struggles to compete because uh you know, markets can access these offshore platforms that have less restrictions and less costs. Um I I don't think it's a panacea to have regulation, but I think if we focus on the low hanging fruit, the simple centralized entities looking at things like stablecoin regulation, which is a clear, immediate need. Um as well as things like title three and four of the Responsible Financial Innovation Act, which go towards uh investment contract status and being able to operate a US exchange with a central federal regulator. Because one of the aspects that makes it very difficult also to business in the US is you have 53 different regulatory authorities that you have to adhere to each of the individual states or 49 of them. Uh the district of Columbia in three territories, if you want to operate a, a truly national exchange. And that is, that's difficult when I was in private practice, I represented exchanges uh from time to time and the process of getting on boarded and dealing with 53 or 54 regulators instead of one is a very, very difficult thing.