quite a bit of money<\/a> in crypto, and Democrats want to include rules that would effectively block them from doing that.<\/p>\nFrom the industry\u2019s perspective, the issue isn\u2019t necessarily with insider trading rules themselves \u2014 most people aren\u2019t against the idea. The concern is political feasibility. The argument is: if those provisions stay in the bill, Trump won\u2019t sign it. <\/p>\n
That\u2019s also the position Republicans have taken. It\u2019s not that they oppose the rules in principle, but they know that including them makes it impossible to get a signature from the current White House. <\/p>\n
<\/p>\n
CN: With the recent local elections, particularly in New York, there has been some talk of a resurgence of the progressive wing of the Democratic Party. Do you think that\u2019s a meaningful trend?<\/strong><\/p>\nCohen<\/strong>: I don\u2019t see the New York results as a major bellwether for the rest of the country. Yes, there was a high-profile example with Zohran Mamdani, but I wouldn\u2019t say he\u2019s significantly further to the left than, say, Brandon Johnson in Chicago or Barbara Lee in Oakland.<\/p>\nWhat I found more meaningful were the results in states like New Jersey and Virginia. Those were supposed to be close races, but ended up with decisive wins for moderate Democrats like Sheryl and Spanberger. So, if anything, I think the broader signal is that the Democratic Party is holding steady in the center \u2014 not shifting dramatically left.<\/p>\n
CN:<\/strong> Regardless of whether the shift is progressive or moderate, Democrats have taken the lead. With that in mind, how would a bipartisan approach to crypto regulation look like?<\/strong><\/p>\nCohen<\/strong>: That\u2019s a great question \u2014 and honestly, we haven\u2019t seen it happen yet in a real way, so we\u2019re still figuring that out.<\/p>\nBut I do think there\u2019s room for alignment. The Elizabeth Warren wing of the Democratic Party is focused on fraud prevention, investor protection, and enforceable regulation \u2014 and those are reasonable concerns. I\u2019d argue that stronger anti-fraud protections would be good for the market overall.<\/p>\n
The sticking point tends to be who does the regulating. Democrats favor agencies like the Consumer Financial Protection Bureau (CFPB), which Warren helped create. Republicans, on the other hand, lean toward the SEC or CFTC. So there\u2019s a debate over jurisdiction \u2014 but I don\u2019t think that\u2019s an unbridgeable divide. With real negotiation, they could find common ground.<\/p>\n
CN: Mamdani\u2019s base includes a lot of young, educated, white male voters \u2014 the same demographic most likely to hold crypto. Is there a disconnect between what the industry wants and what retail investors actually care about?<\/strong><\/p>\nCohen<\/strong>: I\u2019m not sure there\u2019s a full disconnect, but I do think there\u2019s a gap in expectations. Most retail crypto users don\u2019t want to deal with KYC. That\u2019s a big reason they\u2019re in crypto instead of traditional finance \u2014 they don\u2019t want to submit personal information just to move stablecoins from one wallet to another.<\/p>\nAt the same time, nobody wants to get rugged. No one wants to lose money to a scam or fraud. So yes, there\u2019s this contradiction in crypto: people demand full decentralization, anonymity, and self-custody \u2014 until something goes wrong. Then the first question is, \u201cWhere are the regulators?\u201d<\/p>\n
So there\u2019s clearly a desire for some level of investor protection \u2014 just not if it comes with friction, surveillance, or restrictions. Finding the right balance is tough.<\/p>\n
CN: That contradiction was a big part of the criticism during the SEC\u2019s Gensler era \u2014 focusing enforcement on large players while meme coins and influencers ran wild. What\u2019s your take?<\/strong><\/p>\nCohen<\/strong>: The Gensler approach was a disaster, both strategically and politically. He could have issued interpretive guidance \u2014 the SEC has the power to do that \u2014 but instead, they chose a strategy of trying to crush the industry outright.<\/p>\nIt didn\u2019t work. You can\u2019t \u201cban\u201d crypto \u2014 that\u2019s not how this works. What it did do was destroy trust. The industry had no reason to work with the SEC, and the SEC made no effort to work with the industry.<\/p>\n
I don\u2019t think even the Democratic Party fully understood what Gensler was doing. Either they weren\u2019t paying attention, or worse, they supported it. But I\u2019m hopeful that lessons have been learned. The bipartisan process we\u2019re seeing now \u2014 in the Clarity Act and Senate proposals \u2014 is a huge improvement. It\u2019s not Gensler\u2019s approach, and that\u2019s a good thing.<\/p>\n
<\/p>\n
CN: So, from your perspective, what are the most important regulations that the crypto industry is still missing today?<\/strong><\/p>\nCohen<\/strong>: There are two major areas where regulation is still lacking. The first is stablecoin regulation. The so-called \u201cGenius Act\u201d has technically passed in the U.S. market, but it\u2019s not yet usable. There\u2019s no licensing framework in place. We need actual rules that let stablecoin issuers apply, operate, and comply.<\/p>\nThere\u2019s a draft of those regulations circulating. I haven\u2019t seen the full document, but people who have are giving feedback. One of the big concerns is around yield \u2014 specifically, whether stablecoins will be allowed to earn yield, not just from issuers but from anyone. U.S. banks are lobbying hard to block this.<\/p>\n
If those banks succeed and regulated stablecoins can\u2019t earn yield in any form \u2014 even through DeFi \u2014 then no one will use them. It\u2019ll end up like in Europe under MiCA, where the regulated stablecoins are barely used. People just default to unregulated options like DAI or USDT. So that\u2019s a huge fight. And if the banks win, we\u2019ll see very little adoption of U.S.-regulated stablecoins.<\/p>\n
CN: And what about the market structure legislation you mentioned earlier? What\u2019s at stake there?<\/strong> <\/p>\nCohen<\/strong>: The market structure bill in the Senate is crucial \u2014 particularly the provision that would clearly define which tokens are not securities. That one clause could change everything for the crypto industry.<\/p>\nRight now, the SEC has been operating in a gray area. They\u2019ve claimed that almost every token besides Bitcoin could be a security \u2014 including Ethereum \u2014 without ever proving it in court. That ambiguity is what allowed the Gensler administration to pursue its aggressive enforcement agenda.<\/p>\n
If the market structure bill passes with bipartisan support and explicitly states that certain tokens are not securities, it would finally give the industry a safe, legal framework to operate within. It wouldn\u2019t just clarify the law \u2014 it would also prevent future administrations from trying to roll back that clarity.<\/p>\n
That kind of legal certainty is foundational. It\u2019s what would allow real innovation and compliance to coexist.<\/p>\n
<\/p>\n
CN: If Ethereum and similar tokens are no longer treated as securities, what happens to investor protection? Securities law requires disclosures from issuers. Is anyone thinking about how to build comparable transparency into crypto?<\/strong><\/p>\nCohen<\/strong>: That\u2019s certainly something that Elizabeth Warren wants. She\u2019s argued that even if these tokens aren\u2019t securities, there should still be some disclosure requirement to protect investors.<\/p>\nBut here\u2019s the problem: in DeFi, who would do the disclosing? Take Ethereum. Sure, there\u2019s the Ethereum Foundation, but do they have access to all the relevant information? Should they be legally liable for it? I don\u2019t think they want that role, and I\u2019m not sure it fits the ethos of decentralization.<\/p>\n
In Bitcoin\u2019s case, no entity could even hypothetically take on that responsibility. And that\u2019s part of the philosophical divide: if you truly believe in permissionless networks, then there might not be a central party to hold accountable \u2014 or to require disclosures from.<\/p>\n
CN: Some people argue that blockchains provide transparency by default \u2014 the code is open, the transactions are on-chain. But there\u2019s also off-chain activity, insider info, and market manipulation. How do we balance transparency with risk in permissionless markets?<\/strong><\/p>\nCohen<\/strong>: That\u2019s the core trade-off. If you want a truly permissionless system, you have to accept that there will be more risk \u2014 including market manipulation and insider trading.<\/p>\nI think people should be able to choose. If you want to participate in a market that doesn\u2019t require KYC, doesn\u2019t enforce disclosures, and embraces full decentralization, then you should be free to do that \u2014 but you should also understand the risks.<\/p>\n
At the same time, if you want investor protections, you can participate in other markets that offer those. Nobody is forcing you to buy Bitcoin or Ethereum. There are other options. But we shouldn\u2019t try to force traditional regulatory models onto decentralized systems where they just don\u2019t fit.<\/p>\n
So yes, blockchains offer a degree of transparency, but they don\u2019t eliminate the need for trust \u2014 especially when off-chain actions can affect markets. We need to be honest about that, and structure markets accordingly.<\/p>\n
CN: You\u2019re a lawyer, and I\u2019m sure you heard that your profession\u2019s role in any meeting is to say, \u201cNo, you can\u2019t do that.\u201d What are some of the questions you\u2019re most often asked where you have to draw a hard line?<\/strong><\/p>\nCohen<\/strong>: So, for what we do at Centrifuge \u2014 tokenizing real-world assets \u2014 we operate in a pretty heavily permissioned part of the crypto market. Everything on our platform is actually a security, regardless of what the market structure bill eventually says. So we follow securities laws and take compliance seriously.<\/p>\nThat\u2019s a different environment from something like a DeFi protocol. If you were general counsel at Aave, for example, you\u2019d take a very different approach. We also work with TradFi partners like Janus Henderson and S&P, and they have their own compliance requirements. So we operate with a different risk profile than many other crypto companies.<\/p>\n
That said, the biggest non-negotiable red line for me, and for most lawyers in this space, is anything touching sanctions. If you\u2019re moving stablecoins in or out without checking for sanctions compliance, that\u2019s a hard no. That gets you into real trouble. <\/p>\n
<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
According to Eli Cohen, Centrifuge\u2019s chief legal officer, the crypto industry should take note of Democratic Socialist Zohran Mamdani victory in New York City\u2019s mayoral election. The crypto industry, after…<\/p>\n","protected":false},"author":1,"featured_media":15547,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-15546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/15546","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=15546"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/15546\/revisions"}],"predecessor-version":[{"id":15548,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/15546\/revisions\/15548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/15547"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=15546"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=15546"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=15546"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}