“The art of communication is the language of leadership.” – James Humes
In the ever-evolving cryptocurrency landscape, the Securities and Exchange Commission (SEC) move in late June marked a significant shift. With the tally of cryptocurrencies now classified as securities currently standing at close to 70, the implications for crypto projects, investors, and exchanges are far-reaching. Yet, what does that reach look like? And what is next for these companies and others?
For many in the cryptocurrency industry, categorizing a coin or token as a “security” fundamentally changes the dynamics of its trade, issuance, and overall perception. Sadly, perception often becomes a reality as that is what people are led to believe.
And how do you change perceptions? You tell your story in your own words, clearly and effectively.
Legal Actions are an Opportunity
Cointelegraph published an article in June highlighting the SEC’s legal actions against industry giants Binance and Coinbase, underscoring the financial magnitude of this shift – with over $100 billion worth of tokens currently in the spotlight. However, until the SEC can establish that each crypto asset they named is a security, the lawsuits will continue for some time, with limited progress. This also creates a more extended period for haziness in the industry – something which folks have become accustomed to.
Without a resolution, the best projects in the crypto space will likely move from the U.S. to friendlier climates, especially throughout the EU, with MiCA set to go into effect in 2024. This leaves the SEC and these companies in a cold war, which can only be answered by correctly understanding what is at stake on both sides.
There are Proponents – Yes, even at the SEC
Some public crypto proponents at the SEC, including Hester Peirce, made her support known during the recent Blockworks Permissionless event in Austin, TX. Peirce noted that crypto companies should not give up on the U.S., something many crypto companies made the tough decision to do over the last few years.
On the heels of fighting the cold winds of a long-lasting crypto winter, coupled with regulatory uncertainty, a reputation management program may be needed for companies facing public scrutiny and a lack of trust by stakeholders. And having internal voices that are rooting for success does not hurt either.
Along with the roughly 70 digital assets called securities by the SEC, many on the periphery may also want to examine their messages to the public. This is an investment in the future of not only their company but the industry as a whole. If the SEC is having uncertainty, regardless of whether their hesitation is ‘fair’ or not, it may be time for the veil of mystery to lift.
Given the weight of the recent regulatory classifications, it’s crucial for all players within the crypto sphere – especially those directly affected – to place a high priority on their communication strategies and figure out how to best liaise with the public to ensure their messaging is straightforward and, most importantly, simple to understand.
Commitment to Reputation is Essential
Each project that faces scrutiny must be aligned internally before reaching the public. Each project mentioned by the SEC must continue to showcase a commitment to compliance, along with intentions moving forward; this ensures that public trust is maintained.
Equally important to a solid communications program is that of investor relations. Both current and potential investors need clarity in these situations. And investors need consistent communications – not just when SEC news unfolds.
Outside of press releases and investor letters, regular company updates should include business and company happenings. Investors want to understand, whether they hold securities or coins, to understand the implications of the SEC’s decisions and how a project plans to navigate them is vital. Clear and transparent communication fosters investor confidence.
The Need for Operational Clarity
Outside investors, exchanges, partners, and collaborators also require insight into how SEC and regulatory classifications will impact their business relationships. A robust communication framework for all stakeholders ensures they’re kept in the loop and can adapt their operations accordingly.
With clarity comes the one thing that should be most protected – reputation.
Projects cannot afford to be passive in an industry where reputation is paramount. A proactive communications strategy can address concerns and showcase a project’s commitment to ethical operation and regulatory alignment.
Educating the Public
With so much confusion surrounding the crypto-sphere, projects have an opportunity to educate the public about the nuances of the industry, or the confusion will contribute to the lack of trust.
A well-articulated communication plan can demystify complex subjects like the difference between coins, tokens, and securities while emphasizing the utility and value proposition of the cryptocurrency in question.
Conclusion
The SEC’s actions over the recent months have put the spotlight on the cryptocurrency industry’s regulatory compliance. As this space continues to mature, and as the winter months experience a thaw, it’s becoming evident that having a strategic communications program isn’t just beneficial—it’s essential.
Projects, investors, and exchanges must work collaboratively, ensuring that as the industry adapts to regulatory changes, the broader community remains informed, engaged, and confident in the future of crypto.