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San Francisco News Desk

Before you think this is an extreme view - you should know that members of the US Congress from both political parties, and even some of the SEC's own leadership agree - the SEC, and the regulations for trading securities are both the wrong agency, and wrong laws, to oversee the emerging cryptocurrency space.Let's look at how we got to where we are now, what's going wrong, and the path we can take to correct it.Back in 2017, there was a lot of money flying around, we had a flood of new people rush the market, each wanting their piece of the pie. Unfortunately, with the masses comes those who target them.The cryptocurreny world really was the perfect target, people felt they needed to get in quick, and a lot of people had no idea what they were buying.As the media talked about how rich people who bought Bitcoin years ago are now, scammers were right behind them promising their new coin would be next to follow this path. The lies went viral, I remember seeing conversations between people online, where literally not 1 person involved knew what they were talking about - it was the blind leading the blind on social networking, and many of the scams were spread from victim to victim because of this.Then as these various scams began collapsing, the SEC appeared. Issuing cease and deists, and in some cases pressing charges against company founders.Things had gotten so bad, even people typically against government involvement could be found cheering on some of the SEC actions. It's hard to feel bothered by one of these companies being taken down, and at the time the SEC seemed like the lesser of two evils.Since then, the crypto world didn't just 'wise up' to scammers - we've become downright paranoid.Today practically every startup in crypto is considered a scam until they prove otherwise, guilty until proven innocent. This doesn't really bother me, legitimate projects will have no problem proving themselves.But one thing I know for sure - the scams of 2017 would never get off the ground today.Well, you've likely heard the news this week, they're targeting a well known and established tech company, KIK. They have a messaging app under the same name, and in 2017 they launched their own cryptocurrency called "KIN".The SEC is suing them for $100 million, the amount the company raised.While the SEC has laid out the case of a company losing money turning to an ICO to stop the bleeding, which they summarized in court documents with:Well, that sure sounds shady. That's why initially, I didn't have negative reaction to this news.Then it hit me - that's total bullshit.That happened when I read another headline a couple hours later, saying that since becoming a publicly traded company, UBER has just released their first earnings report - a loss of $1 BILLION!Investing in companies losing money is actually extremely common, and as far as the actual numbers go - Kik is actually on the low end, with an estimated $3 million per month operating cost. Uber loses that in a few days. So does companies like Tesla, which lost nearly $500 million so far this year - and that's an improvement for them over 2018.In the case of Kik, it's supporters were seen pushing Kik and implementing it into their app as a way to turn things around. Another very common, thing for a company to do - seek new investors to fund an improvement, that could turn a company losing money into a profitable one.So what did Kik really do? Sold an "unlicensed security" - and people over estimate how easy it is to earn that label.If someone from the company leadership implies that their cryptocurrency could go up in value - that's it, you've crossed the line and turned your token into a 'security'.What we're really getting is the SEC yelling "leave America, or else" at every company that could be considering implementing tokenized assets.And they are leaving the country - taking their jobs, and tax dollars with them.America's loss has been other nation's gain. Governments that have embraced the cryptocurrency and blockchain explosion are reaping massive rewards.There's a whole area of Switzerland now being called 'crypto valley' - they found an easy way to give their economy a huge boost - just do what Silicon Valley should have been doing this whole time.Already introduced in Congress by Congressmen Warren Davidson (Republican) and Darren Soto (Democrat) - the Token Taxonomey Act would officially remove the 'security' label from many digital assets.This does not mean the crypto market becomes the wild west. Digital assets would be treated as a commodity (like gold or silver) and regulated by the CFTC.Think of it this way - every scam ICO violated laws beyond being an unregistered security. Lying to investors is fraud, disappearing with their money is fraud and theft - these would still be illegal, and there would still be an agency in charge of preventing this, or punishing those who do it.In a surprising turn - in a speech from SEC commissioner Hester M. Peirce, he highlighted the Congressman's proposed solution, saying:So where do things stand? The last update on the bill was following it's official introduction into the Congress, this is typically followed by various committees evaluating it, proposing possible changes/amendments, then it goes up for a vote.How long this process takes greatly varies, but it's becoming clear that this should be treated as an urgent matter.Artificial Intelligence and blockchain own the title of today's 'hottest' emerging technologies, and there's no way to put a number on the long term economic damage caused by one of these fleeing the United States to avoid SEC overreach.It's years too early to even guess who will be the Apple or Microsoft of blockchain, and release that blockchain powered product that includes implementation of a native token - but until things change we can be sure it won't be an American based company.As the reporter who broke the story on the Token Taxonomy Act, I have been informed members of Congress have shared, and even used some of my arguments in it's favor internally.We will make sure this reaches the offices of those we have contact with already, and with the utmost respect I would like to suggest - research Switzerland's Crypto Valley, and see the results of the government doing things right.This is the model we should aim to replicate in the United States.*Details updated 7/19/19-------