3 Questions for Department of XYZ Advisor Ji Kim

Ji Kim is the Chief Legal & Policy Officer at the Crypto Council for Innovation. You can find him on X at @_jikim.

Matt Homer: May was perhaps the most momentous month ever for crypto policy in the United States. Within the course of just a few weeks we saw the US House of Representatives pass several notable pieces of bipartisan legislation including FIT21 and a repeal of SAB 121, the latter of which was then passed on a bipartisan basis (although it was later vetoed by President Biden). What is the significance of these developments and what do you think they mean going forward? 

Ji Kim: More broadly, all of these developments reflect that there is strong bipartisan support in Congress for digital assets and the need for regulatory clarity. Further, it is an indication that both political parties understand that digital assets are here to stay and that clear rules of the road are necessary to foster this innovation and safeguard customers and investors. Both FIT21 and the SAB 121 repeal clearly reflect this. The vote on FIT21 in particular is an indication that reactionary approaches are not the way forward and that the U.S. needs to be leading the way in fostering well-regulated financial markets and services while providing much needed clarity–something the U.S. has unfortunately lagged behind thus far compared to other leading global jurisdictions. 

Matt Homer: On the regulatory side, it seems nearly everyone has been surprised to see an Ethereum ETF moving toward approval so quickly. What do you think we should make of this rapid progress (compared with the BTC ETF) and does it have any broader regulatory implications? 

Ji Kim: While it is difficult to speculate about why and how the current administration of SEC seemingly changed course by approving the 19b-4 forms for several Ethereum ETFs, this is a win for the rule of law and highlights the importance of making reasoned arguments to impact policy, particularly when regulators are overreaching or taking legally flawed positions. We saw this in 2023 when the D.C. Circuit ruled that the SEC failed to provide a coherent explanation for its denial of spot bitcoin ETFs when it had previously approved bitcoin futures-based ETFs. The D.C. Circuit concluded that the SEC had acted “arbitrarily and capriciously” in doing so. The rule of law is not optional, even for the government.

Zooming out, ETH ETFs reflect a maturing sentiment towards digital assets. While we are still awaiting for the S-1 process to unfold, we are now on the way for investors to have access to additional well-regulated vehicles to invest in ethereum. 

Matt Homer: It feels like the overall climate toward crypto has shifted much more quickly than one could have imagined. Do you think this shift is here to stay? How should builders interpret these changes? 

Ji Kim: Builders, founders, and innovators will go to jurisdictions that look to work with industry to understand digital assets in order to provide clear rules of the road to build, operate, and responsibly grow products, services, and businesses. In the U.S., we are starting to see more of this. To be clear, more work needs to be done, but I do think this shift is here to stay. Lawmakers are finally understanding the need for a comprehensive regulatory framework that protects American consumers, drives growth, fosters financial inclusion, and mitigates risks to national security.