Rulemaking over Enforcement describes a regulatory approach where authorities prioritize establishing clear, forward-looking rules and guidelines before resorting to punitive actions. This method aims to provide market participants with explicit instructions on compliance, thereby reducing ambiguity and fostering a predictable operating environment. In contrast, an enforcement-first approach relies on prosecuting violations of existing, often broad, statutes. This preference seeks to proactively shape market behavior.
Context
The debate over rulemaking versus enforcement is particularly contentious in digital asset regulation, with many industry participants advocating for clearer rules from agencies like the SEC. They argue that an enforcement-first strategy stifles innovation and creates uncertainty. Regulators often contend that existing laws apply, but there is increasing pressure for more tailored and explicit guidance to promote compliance and market development.
The SEC's "Project Crypto" will formalize a token taxonomy and introduce tailored safe harbor exemptions, structurally redefining the US compliance perimeter for digital asset offerings.
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