NEAR Foundation Town Hall - June 14th, 2023 Regulatory update excerpt

Captions as YouTube publishes them, usually machine-generated, so product and people names can be misheard.

1. 0:00

   foreign thank you very much and hello everybody um for those of you who don't know me I'm Chris Donovan I'm the general counsel here at the near foundation and I just wanted to spend um a few quick minutes just sharing some thoughts about the recent regulatory developments in the US that I'm sure many of you are probably already aware of but some quick context for those of you who might not be last week the SEC the Securities and Exchange Commission U.S financial regulator it filed an

2. 0:31

   enforcement action against coinbase alleging that coinbase is operating an unregistered Securities Exchange and as part of that complaint the SEC also alleged that a whole bunch of different digital assets that are available on coinbase's platform including the near token are being sold as investment contracts and so as Securities under U.S law now a lot of you might have seen that we released a public statement last week actually you know covering off our views

3. 1:01

   about those developments and confirming that you know we disagree with the inclusion of the near token in the complaint and that in any case more generally you know we're not unduly concerned by the development but nonetheless I thought it would be helpful just to spend a little bit of time here running you all through some of our more detailed thinking on the issues and also just to expand on that public statement a little bit more as

4. 1:24

   well so first really important thing to emphasize is that the complaint isn't against the near Foundation or any other member of the near ecosystem and nor does it allege that anyone in the near ecosystem has done anything unlawful which is you know obviously very important and the foundation has always taken its legal obligations extremely seriously and we firmly believe that we

5. 1:47

   have been and we will continue to be compliant with all applicable laws and of course like I mentioned at the top we also disagree with the inclusion of the near token and the complaint but notwithstanding that in any case it's important to recognize that the complaint doesn't specifically Target the near ecosystem right there are many other tokens other ecosystems that are included in the in the coinbase

6. 2:10

   complaints with 12 others in fact and actually over the last six to 12 months the SEC is actually designated over 55 tokens as Securities right so in our view the complaint is very much a reflection of how the SEC is thinking about approaching our industry as a whole right and share gansler at the SEC he's routinely stated that he thinks All Digital assets are securities and that actually is a view that's considered unturnable by many lawyers many policy

7. 2:42

   makers and and other commentators particularly when there is currently no viable route to registration or compliance for projects in the US right so one other important detail um as well just before I move on to the next slide is that you know the SEC asserts that actually it only needs to convince the court that just one of the assets that it included in the complaint is a security to successfully establish

8. 3:07

   a violation of Securities laws by coinbase right which means that the SEC is very much incentivized to cast a wide net and actually the way that the SEC is making these allegations so against an exchange coinbase and binance and others are not actually directly against the ecosystem participants it makes it hard for any ecosystem participant to actually intervene and challenge the allegations so in effect the SEC can can make these allegations without fear of

9. 3:38

   material challenge so without a doubt you know there is a lot of regulatory uncertainty in the US right now that's that's for sure and it's it's very unfortunate you know it's it's harming the industry particularly in the US and in my view it's it's very much unnecessary as well um and the complaint in many ways is a reflection of that challenging environment but I think it's also really important not to forget that you know

10. 4:03

    the technology that's underpinning our ecosystem it's Global it's permissionless it's decentralized right and the world is a lot bigger than just the United States and actually the US is becoming increasingly an outlier globally in terms of its hostile approach to our industry right there are many other jurisdictions globally that are making you know lots of meaningful steps to engage with our industry in a good faith way and Implement a

11. 4:28

    reasonable proportion of legal Frameworks that will actually support the growth and development of our industry and so you know Switzerland is a great example of that right which is where the foundation is based Switzerland has had a really clear symbol effective regulatory framework digital assets for several years um and as a result as a you know there's a fantastic vibrant web 3 Community here and you know it's it's important to recognize as well that actually under

12. 4:54

    Swiss law under that framework the near tokens been deemed to be a payment token and not a security now you know we've always believed that reasonable proportionate regulation is is essential right for the for the global growth and Adoption of web3 technology and that was a big part actually of the policy principles piece that we published a few months ago uh I'd encourage everyone to to give that a read because it you know it sets out what drives the foundation in the policy and advocacy work that we do but also

13. 5:25

    how we think more broadly about the global regulatory environment there's a lot of important geopolitical shifts kind of happening at the moment as different jurisdictions compete to embrace our industry and we also actually have some exciting uh policy announcements coming up in the next few weeks as well so very much watch this space and in the meantime you know really the messages that the foundations

14. 5:49

    you know very confident that we're well prepared we're fortunate to have a fantastic team and Stellar external advices uh to make sure that we can successfully navigate and you know help ensure that the ecosystem can successfully navigate whatever complexities whatever challenges the ecosystem might face regardless of where those challenges might arise whether it's in the US or elsewhere right so we

15. 6:13

    will continue to help keep the ecosystem safe and secure and in the meantime it's business as usual and we should all try and focus on what's important and and you know do our best to not let ourselves get distracted