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Regulation and Beyond: Key Takeaways from Consensus 2023

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Team EEA, in the guise of Executive Director Dan Burnett, Director of Technical Programs Chaals Nevile, and Director of Sales James Harsh, was on the ground at this year’s edition of Consensus by Coindesk, which was held in Austin Texas from April 26-28. 

Here are the key takeaways as reported by our team and other news sources. 

There is no doubt that regulation was the major theme at the conference, and in particular regulatory uncertainty in the US.

Among the key industry figures voicing their apprehensions was Paul Grewal, Coinbase’s Chief Legal Officer. In a panel discussion Grewal pointed out that he was bracing for a potential lawsuit from the SEC, an event that could shed some light on the SEC’s specific grievances with Coinbase’s operations. The anticipation of such a lawsuit underscores the extent to which crypto companies are flying blind in the current regulatory environment.

Kate Brady, Head of Communications for Web3 at PepsiCo, discussed how she was being stymied in her work by the lack of regulatory clarity. This underlined that regulatory uncertainty is a potential threat to the competitiveness of American companies in the rapidly evolving Web3 space.

A good illustration of where this uncertainty is coming from was seen in the “The Turf War: Veterans of the SEC and CFTC Weigh In” panel. This brought former commissioners and staff of the SEC and CFTC into a discussion around the relative strengths and weaknesses of each agency in supervising crypto markets. The divide is large, with the SEC asserting that virtually all crypto assets, including Ethereum, are securities and fall under its purview, while the CFTC claims that certain digital assets, including Ethereum, are commodities and should be regulated by the CFTC.

The conference presentations on these topics were reflected in many discussions the EEA team had with member organizations and prospective members, as well as in multiple side events held around the formal conference.

Despite these worries, it would be wrong to say that Consensus was held on a down note. Quite the contrary. As our team found in many of their discussions, there was a general sense of optimism among many present.  

The contrast between the situation in the US and what is happening in Europe, Asia-Pacific and beyond is one obvious grounds for this optimism. Companies who are feeling the headwinds in the US are in many cases well-placed to continue their development in the many crypto-friendly hubs in those regions that not only have more regulatory clarity, but also are home to talented development communities who have developed good working relationships with local enterprises.

Our team also found a strong sense among many that, coming out of one of the most difficult periods for crypto last year, developments in blockchain have been carrying on apace and that it was time to keep building. That added to the optimistic feel at the conference around blockchain and decentralization.

In a more hopeful vein for American crypto and blockchain companies, Patrick McHenry, Chairman of the US House Financial Services Committee, and US Senator Cynthia Lummis, confirmed that the House Financial Service Committee and Agricultural Committee would hold the first joint hearing on the market structure surrounding digital assets in May 2023.  Such hearings could be an important step towards providing more regulatory clarity for companies operating in this space.

While both McHenry and Lummis expressed optimism about future developments in crypto regulation, according to our team on the ground, the general mood was more ‘wait and see’. There is a lot of appetite for regulation in the US, and recognition that doing it well is important, but the expectation is that it will take a lot of time. It will also be important for the industry to get together and figure out what they are interested in, or risk losing an opportunity to get a seat at the drafting table.

The stakes however are high. Regulatory uncertainty doesn’t just affect crypto companies. This, as one Coindesk editor noted, was underscored in the talk by Pepsi’s Brady. Despite PepsiCo being a mainstream American company and not intrinsically part of the crypto industry, it is aiming to make a mark in Web3. However, the absence of regulatory clarity is proving to be a significant barrier. As mentioned above, this has implications for the competitiveness of American companies in the Web3 space. 

There were a host of other important topics on the agenda as well. One that caught the attention of our team was crypto accounting. 

With the value of cryptocurrencies fluctuating wildly on a daily basis, it can be difficult to keep track of the current value of one’s holdings, and to properly account for gains and losses when they occur. 

One panel discussion at the conference focused specifically on the unique challenges facing businesses when it comes to crypto accounting. The panelists discussed the importance of accurate record-keeping for tax purposes, as well as the need to properly track the value of cryptocurrency holdings on a balance sheet.

A number of innovative solutions were presented at the conference to help deal with these challenges. These include specialized accounting software that integrates with popular cryptocurrency exchanges, as well as tools that allow for automatic tracking of gains and losses over time.

The EEA hosted an exclusive Member-Only breakfast, sponsored by EY. Despite the early hour, a number of EEA Members turned up to meet and mingle in person, many for the first time. 

Paul Brody, head of blockchain at EY and a member of the EEA Board, was a host and participant. Co-chairs Michael Gonzales of EY and Dyma Budorin of Hacken talked through where the DRAMA Working Group is in developing best practices for accounting in the DeFi industry. Other companies represented include OpenZeppelin, Microsoft, ConsenSys Mesh, Wanchain, Noves, Certik, C4, Hyperledger, Bitwave, Entersoft, Cartesi, and Cryptio

The breakfast provided an opportunity for EEA members to network and share insights on various topics related to blockchain technology. Overall, this event served as a valuable platform for collaboration and knowledge sharing among industry leaders in attendance.

You can find more about Consensus 2023 on Coindesk.

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