Source: AiYing Compliance
The re-election of Trump as the President of the United States has brought new uncertainties to the already volatile cryptocurrency industry, but it has also brought some positive news. This is also thanks to the previous statement "Explaining the 'American Bitcoin Strategic Reserve Act': Purchasing 20,000 Bitcoins per year, reaching 1 million Bitcoins within five years".
However, with Trump's victory in this election, many are wondering: what does this political change mean? Is it a relaxation of regulations, or will it bring new compliance risks? In this article, we will analyze the regulatory trends of the new US government and policy expectations from the perspectives of a16z and Aiying.
I. "Noise" and "Signals": Market Optimism about Regulation
After Trump's re-election, many market analysts and leaders in the cryptocurrency industry expressed optimism about the future regulatory environment. The cryptocurrency division of the renowned venture capital firm a16z (Andreessen Horowitz) recently published its views, believing that the founders of cryptocurrency projects can now be more confident in experimenting with innovation, especially in token issuance and community building, and many plans that were previously shelved due to regulatory concerns can now be restarted.
a16z emphasized that there is now an opportunity for constructive dialogue with regulatory and legislative authorities, which is expected to gradually bring regulatory clarity to the blockchain industry. This attitude seems to affirm that regulatory authorities may adopt more inclusive and innovation-driven policies. However, a16z also reminded that while the regulatory environment may become more flexible, it does not mean that cryptocurrency companies can completely escape legal constraints, especially for projects with centralized features, which may still face strict scrutiny.
a16z also pointed out that there may be a lot of "hot opinions" and various speculations about regulation and legislation in the coming months, but most of them are likely to be "noise" and unable to accurately predict the direction of regulation. Although it is still unclear what specific changes will occur in the future, one thing is certain: the new government policies will have a significant impact on the cryptocurrency industry and may create a more favorable environment for the development of the entire industry.
Aiying believes that these statements are both "signals" and "noise". The signal is that US regulatory authorities may indeed give innovators more freedom within the existing framework to explore various applications of blockchain; the noise is that many comments may have over-interpreted the short-term regulatory relaxation and overlooked the complexity of legal operations.
II. The "Dawn" of Token Issuance, or a New Round of Regulatory Challenges?
After the election results were announced, a16z specifically mentioned that token issuance may be entering a new "dawn", and many entrepreneurs can boldly use tokens to distribute project control and build communities. As one of the most controversial financial tools in the cryptocurrency ecosystem, token issuance has been in a regulatory gray area in recent years - is a token a security? How to prevent it from becoming a tool for speculation and illegal financing? These questions have always been the focus of regulatory attention.
Trump's re-election has brought expectations of regulatory relaxation, making token issuance seem more likely. But the reality is that the compliance requirements for token issuance have not diminished as a result. The "Token Issuance Guidelines" mentioned by a16z are still very valuable, especially for founders to consider whether their token model relies on the trust of a centralized entity. This means that any project dependent on centralization will still face strict scrutiny in the future. This is particularly important for the development of Web3, as it emphasizes the core position of decentralization in compliance.
Although the future regulatory environment may be more relaxed, the basic principle of "where there is trust, there is regulation" still applies. This means that entrepreneurs need to continue to reduce the dependence on centralization in their projects to reduce regulatory risks. At the same time, a16z also stated that they will continue to push for a clear regulatory framework next year, encouraging and supporting innovation and decentralization.
III. Changes and Continuities in US Regulatory Trends: From Wyoming to the Nationwide
Aiying particularly noticed that a16z mentioned that they will soon release new guidelines on the use of "Decentralized Autonomous Non-Profit Associations (DUNA)", a legal innovation that can help projects establish entities in the US while reducing the liability of token holders, managing tax and compliance requirements. This innovative structure, especially in blockchain-friendly states like Wyoming, may provide a solution for projects that want to establish a legal identity but avoid liability. However, whether this legal structure can be recognized by other states or even the federal government remains to be seen.
In recent years, Wyoming has been seen as a "testing ground" for the cryptocurrency industry, with its DAO laws providing legal identity protection for many decentralized organizations. However, whether Wyoming's innovations can be promoted nationwide and recognized by federal regulators is a question that entrepreneurs must seriously consider in the coming year. Aiying believes that the development of the US cryptocurrency industry depends not only on the "pioneering" of local governments, but also on whether the federal government can adopt an open-minded attitude towards these experiments.
a16z also emphasized that they will soon release detailed guidelines on DUNA to facilitate the activities of token holders in the US, reduce their tax and compliance burdens, and promote more economic activities. These initiatives, combined with Wyoming's unique position in DAO laws, may bring new development opportunities for US cryptocurrency projects, but the effect remains to be seen.
IV. Conclusion: Opportunities and Responsibilities in Regulation
The regulatory changes after Trump's re-election can be seen as a new opportunity for the cryptocurrency industry, but we also need to be alert to potential legal risks. Regulatory relaxation may provide more experimental space for innovators, but it does not mean that compliance requirements can be ignored. From Aiying's perspective, the wisest approach for entrepreneurs in the current environment is to actively embrace decentralization and minimize the centralized features of their projects, ensuring transparency and legitimacy. At the same time, entrepreneurs in the industry should closely follow the release of new legal guidelines, such as DUNA, and find suitable legal structures to reduce risks.
To avoid US jurisdiction as much as possible, the key is to take a series of measures to ensure that the project is as decoupled from US laws and regulations as possible. The reason why the Bancor project was able to successfully avoid the jurisdiction of US courts is mainly because its operating entity and founders are located in Israel and Switzerland, and its project activities mainly take place outside the US. This allowed Bancor to effectively avoid the impact of US securities laws through legal and territorial strategies. To emulate Bancor's approach, the following measures can be taken:
1. Establish the company in a country outside the US
Like Bancor, register and operate the company in other jurisdictions, such as Switzerland, Israel or other countries that are more friendly to cryptocurrency projects. This can effectively avoid the project being directly subject to US law.
2. Ensure that the founders and team are not in the US
Bancor's founders and key team members are all outside the US. If the founders and team are in the US, they will automatically be subject to US law.
3. Avoid providing services to US investors
Restrict the participation of US investors: Bancor explicitly stated that it does not provide services to US citizens or residents, and strictly limits their participation in token sales. You can use user agreements, KYC (Know Your Customer) procedures, and geo-blocking technologies to ensure that US investors cannot participate in token sales or use your platform.
4. Do not promote in the US
Like Bancor, avoid any form of marketing or promotion in the US. Ensure that the project's promotional activities are not carried out through US social media, advertising platforms or news channels, so as not to attract the attention of US investors.
5. Use the "Regulation S" exemption
If you cannot completely avoid contact with the international market, you can use the Regulation S exemption in the US Securities Act, like Bancor. Regulation S allows securities to be issued in markets outside the US, but requires you to ensure that these securities do not flow back to the US. This can reduce conflicts with US securities law.
6. Token design to avoid being viewed as a security
Ensure that the token design is more viewed as a "utility token" rather than an investment tool. This can be achieved by avoiding excessive promises of profits or returns, and emphasizing the functionality of the token on the platform. Bancor tries to avoid the token being viewed as a security by providing liquidity function, rather than just as an investment tool.
7. Choose non-US legal system and dispute resolution mechanism
In the user agreement and token sale contract, clearly specify the application of a non-US legal system and choose a non-US dispute resolution mechanism.
