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Crypto-Hostile Massachusetts Extends Olive Branch to Blockchain Industry

Last Updated March 4, 2021 3:19 PM
Gerelyn Terzo
Last Updated March 4, 2021 3:19 PM

A new working group in the Commonwealth of Massachusetts launched by the state’s chief securities regulator is looking to clear up some of the murky regulation for blockchain innovators. The olive branch couldn’t have come too soon as Western U.S. states embrace blockchain innovation and even Congress inches closer to crypto-friendly regulation.

Massachusetts Fintech Group to Help Crypto Startups Comply with Securities Laws

Massachusetts has aggressively cracked down on bad actors in the crypto space, particularly when it comes to ICOs. | Source: Shutterstock

Massachusetts regulators haven’t made it easy for blockchain entrepreneurs. State officials have kept bitcoin and other cryptocurrencies at arm’s length by attempting to dissuade investors and spotlighting the risks of participating in the market and by cracking down on companies operating in the space.

Secretary of the Commonwealth William Galvin, who is the state’s top securities regulator, has been the iron fist behind the regulatory crackdown and has taken an admittedly “aggressive” approach toward ICOs.

Locals, however, can take heart, as a new working group created by the very office that has been targeting cryptocurrency has been launched. The Fintech Working Group is designed to help startups to grasp securities laws, and its early focus will reportedly be on crypto assets. Blockchain startups should gain clarity on what the state deems unregistered securities.

Galvin, who previously characterized bitcoin as a “speculative bubble,” reportedly stated:

“This collaboration will help advise securities regulators on meeting the novel demands of this rapidly growing space.”

While the group is comprised of several members, the secret weapon is clearly Sharon Goldberg, founder and CEO of Boston-based crypto security startup Arwen. She is using her influence to give tech innovation a fighting chance.

Goldberg told American Banker :

“I personally wouldn’t be doing this if all that was going to come out of it was more enforcement action. Enforcement actions are fine, but we first need to know what the rules are.”

She further describes an environment among crypto innovators in Massachusetts that is infused with fear because builders aren’t clear on what the rules are.

Arwen, which was previously known as Commonwealth Crypto , is making it more secure to convert cryptocurrencies at the exchange level even if the trading platform is hacked. Point being, if there is anyone who could bridge the gap between Massachusetts securities regulators and the blockchain space, Goldberg is the one. The fact that she has made it onto Galvin’s fintech working group is positive for local entrepreneurs.

Go West, Blockchain Innovators

In the U.S., states along the eastern seaboard including the likes of Massachusetts and New York have cracked down on blockchain innovation. New York has created a cumbersome process for companies to obtain a BitLicense, which has led to startups such as ShapeShift leaving the state  for greener pastures.

Meanwhile, as ShapeShift CEO Erik Voorhees points out, “finance is moving West,” with states such as Colorado, Wyoming, and Arizona embracing crypto innovation.

The state of Wyoming, for instance, has already passed more than a dozen blockchain laws that provide a clear regulatory roadmap for innovators. Wyoming has earned the nickname as the “Delaware of digital asset law” in a nod to the latter state’s influence in shaping laws across corporate America, where more than half of the Fortune 500 companies  are domiciled.