Cuomo Warns US Risks Falling Behind on Digital Asset Rules
Former New York governor Andrew Cuomo argues that the United States is losing ground to Europe on digital-asset regulation, citing the Senate's failure to advance the Digital Asset Market Clarity Act and the SEC's new Innovation Exemption as signs of a fragmented approach that drives innovation and investment abroad.
Andrew Cuomo, the former New York governor who helped create one of the nation's first virtual-currency regulatory frameworks, is warning that the United States is falling behind other countries in setting rules for digital assets and blockchain technology. In a commentary published by Fortune, Cuomo argues that the same pattern that reshaped finance through electronic trading, automated mortgage underwriting and mobile banking is repeating itself with cryptocurrency and tokenization — and that American policymakers are moving too slowly to keep up.
Cuomo points to two recent developments in Washington as evidence of the problem. On Sept. 17, the Securities and Exchange Commission created an «Innovation Exemption» allowing limited trading of tokenized U.S. stocks on qualifying onchain venues. Two days earlier, the Senate failed to advance the Digital Asset Market Clarity Act, legislation intended to establish clearer rules for digital assets and define the respective responsibilities of the SEC and the Commodity Futures Trading Commission. Cuomo said the bill's failure reflected real disagreements over consumer protection, banking, ethics, illicit finance and regulatory authority, but argued that none of those issues should be beyond resolution if there is sufficient political will.
The former governor has a direct stake in the debate. He now serves on the board of OKX, a global financial-technology company, and co-chairs a joint venture between OKX and Intercontinental Exchange, the parent company of the New York Stock Exchange. That venture is developing infrastructure for tokenized NYSE equities and other blockchain-enabled financial products. Cuomo said his experience has given him a firsthand view of how regulatory uncertainty affects decisions about where companies choose to build and invest.
Cuomo traced the modern digital-asset era to the arrival of Bitcoin in 2009 and the blockchain infrastructure that followed. Like many new technologies, it developed faster than the rules governing it, he wrote. The technology was used for legitimate innovation but also by bad actors for illicit purposes, including criminal transactions and efforts to evade sanctions. In 2011, as governor of New York, Cuomo established the New York State Department of Financial Services, which went on to propose what became known as the BitLicense in 2014 — one of the first regulatory frameworks in the country specifically designed for virtual-currency businesses. The regulation took effect the following year and established rules involving consumer protection, anti-money-laundering compliance and cybersecurity. The theory, Cuomo said, was simple: innovation should be encouraged, but it should also be regulated.
More than a decade later, digital assets have become a significant part of the global financial system. Hundreds of millions of people around the world own cryptocurrency, including tens of millions of Americans, and blockchain technology is moving beyond crypto into traditional finance. Cuomo described tokenization as the next frontier, noting that a security that once existed only within traditional financial-market infrastructure can now be represented digitally on a blockchain. Over time, that can reduce layers of intermediaries, allow markets to operate more continuously and make financial products more accessible across geographic boundaries.
The cost of American inaction, Cuomo argued, is twofold. First, there is the issue of consumer and market protection. Digital-asset companies will continue to innovate, but today they are doing so under a patchwork of laws, regulations and agency interpretations, while regulators try to oversee technology that is evolving faster than the rules governing it. Used responsibly, Cuomo wrote, the technology can make the financial system faster and more efficient; in the hands of unscrupulous operators, it can do real harm. The lesson is not that innovation should stop, he said, but that innovation and regulation have to move together.
The second cost is economic. Legitimate companies want to comply with government regulation, but they need to know what the rules are. Businesses can plan around tough rules and adjust to strict rules, Cuomo wrote, but what they cannot easily plan around is uncertainty. He said his travels in Europe on behalf of OKX, meeting with regulators and financial-market participants, showed that Europe has moved ahead of the United States in important areas of digital-asset regulation. Through the Markets in Crypto-Assets regulation, or MiCA, the European Union has established a common framework across its member states for significant parts of the crypto economy. Europe has not solved every problem, Cuomo acknowledged, and its system will continue to evolve. But companies have something they desperately want: greater predictability.
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