CLARITY Act’s ‘Drastically Higher’ Disclosure Thresholds Could Push Crypto Projects Abroad, Coinbase Warns

Coinbase has cautioned that the disclosure provisions in the proposed CLARITY Act would push crypto-projects out of the United States. According to the company, the existing draft has disclosure thresholds that are much higher than those in other countries worldwide.

How the CLARITY Act Could Push Crypto Projects Abroad

In an interview, Karaca Calvert, the Head of the U.S. Policy at Coinbase, stated that the suggested framework would put off American crypto innovation. She said that disclosure requirements are much higher than those under MiCA in Europe.

Calvert argued that the problem has a direct impact on the listing, issuance, and sale of the crypto assets in public markets. She also cautioned that the heavy compliance fees could cause U.S.-based companies and developers to launch their projects in foreign markets. Compliance costs are one reason cryptocurrency companies opposed this crypto bill in its current form.

The CLARITY Act will seek to establish crypto market structure and regulator roles in the United States. However, Coinbase claims that the present version would go against its fundamental principle of ensuring that innovation remains home-grown.

Disclosure Requirements Could Hurt Developers

Calvert added that disclosure requirements need to be right-sized in order to avoid hurting developers at the early stages of the project. She claimed that not all crypto developers can meet the complex, expensive reporting requirements.

Calvert’s statements also covered how the crypto assets were supposed to be treated under U.S. law. Coinbase argued that the majority of the digital assets are inappropriately being treated as securities.

Hence, Calvert argued that assets without ownership rights or a claim to profits should not be regulated by the securities laws. She further said that a significant number of crypto tokens appear more of a commodity than an investment contract through the Howey Test.

This difference is important because the CLARITY Act clarifies how the SEC and the CFTC regulate crypto markets. However, Coinbase is advocating a CFTC-regulated framework for most crypto trading activities.

Regulatory issues have been points of concern that have generated differences among other industry leaders. Recently, the founder of Cardano, Charles Hoskinson, criticized Brad Garlinghouse, the CEO of Ripple, who supported the current version of the crypto market structure bill.

CLARITY Act Will Determine the Future of Crypto

The top crypto exchange said that the recommendations would make the U.S. more in line with the international regulatory standards. It would also render the United States crypto exchanges more competitive with foreign ones.

Calvert emphasized that ambiguity or overindulgence in rules may push innovation out of American markets. She raised the fear that this would undermine the U.S. role in the world of digital assets.

The intent of the legislation should be to promote regulatory clarity and not serve as a deterrent for innovation. The company called on politicians to ensure there were balanced measures in protecting investors and innovation.

The future direction of the U.S. cryptocurrency markets will ultimately depend on the regulatory framework established by the CLARITY Act. Where the next generation of cryptocurrency projects will be developed and launched will likely be influenced by the final version of this crypto bill.