Opinion: Current US regulators cannot effectively regulate cryptocurrencies

Attorney and strategic advisor Alexandra Damsker points out in Understanding DeFi that current regulators such as the Securities Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) cannot effectively regulate cryptocurrencies due to the changing nature of tokens. Damsker explains that the existing regulatory system assumes that regulated projects are static, while tokens are dynamic and capable of multiple functions simultaneously between different holders, or even in the hands of the same holder. This dynamic nature makes it difficult for any existing regulatory system to be fully applicable. Damsker further points out that trying to bring tokens into a traditional regulatory framework would only provide limited protection and could limit innovation. She therefore calls for the design of new regulatory approaches for tokens and their dynamic nature to better adapt to the rapidly evolving technological environment.