“The concern is not simply that the asset is speculative; it is that someone entrusted with public power could potentially benefit from the market value attached to that power.”
Political memecoins connect official influence with personal gain
For Kirkley, attention-driven pricing makes political tokens particularly difficult to separate from the officeholder behind them. He said the association with public authority can blur the boundary between political influence and private financial benefit, even though the token itself may have little underlying economic value.
Rather than treating every blockchain asset as part of the same policy problem, the executive argued that lawmakers should identify the conduct creating the conflict. His proposed focus includes whether an official owns, promotes, or controls a token, and whether the arrangement produces a personal financial benefit.
California’s Legislature adopted a similar concern in AB 2409’s findings, stating that officials issuing or promoting financial instruments can create conflicts, opportunities for pay-to-play arrangements, and risks involving foreign influence. The final law was approved and filed with the Secretary of State on Sep. 27, according to the legislative record.
As reported on Aug. 28, the measure received a 78-0 Assembly vote after the Senate passed it on Aug. 26. Coverage at that stage described separate restrictions for officials issuing tokens and service providers offering covered tokens to California residents.
Under the enacted text, the issuance prohibition covers state and local elected or appointed officers, including legislators and members of government bodies. Its definition of covered employees is narrower, applying to state or local workers with decision-making authority over bids and contracts.
California’s approach separates ethics rules from asset classification
In Kirkley’s view, California could give other jurisdictions a model for addressing officials’ financial interests without making the classification of digital assets more complicated.
He said Washington is already working through how different tokens should be regulated. Folding political conflicts into that same exercise, he argued, could reduce the precision of rules intended to address the assets themselves.
“California could influence the wider debate because it gives lawmakers a way to treat politically linked tokens as a conflict-of-interest issue rather than trying to solve it through broad crypto regulation.”
If other jurisdictions adopt comparable measures, Kirkley said the useful precedent would be targeted restrictions on public officials’ conduct and financial interests. He favored that approach over adding another general restriction on cryptocurrency.
For California investors and platforms, AB 2409 also contains a specific listing provision. According to the enacted legislative digest, it covers memecoins issued on or after Jan. 1, 2027, when offered by, or in partnership with, a federal public official or a state or local public officer. The restriction applies to listings for purchase by California residents or for sale on their behalf.
At the federal level, a Sep. 11 report detailed proposed digital asset restrictions in the revised CLARITY Act covering issuance or sponsorship by public officials, government employees and their spouses. The proposal placed primary enforcement authority with the Justice Department and included a January 2029 expiration.
The same report described proposed CFTC registration requirements for trading protocols whose operators retain specified control over their functions or governance. Those provisions were legislative proposals, rather than enacted requirements.
Asset function should determine how regulators distinguish tokens
When considering regulation beyond political conflicts, Kirkley urged officials to examine “economic function, underlying value and how the asset is actually being used.”
A memecoin priced mainly through attention and speculation differs from a tokenized Treasury representing a financial asset, he said. He also distinguished such tokens from regulated stablecoins used for payments and infrastructure supporting settlement between institutions.
For the GSN executive, a shared blockchain foundation does not establish that the products carry the same risks. He compared a single regulatory category for all blockchain assets with applying identical rules to every product using the internet.
“Putting all of those into one regulatory category because they exist on blockchain rails would be like regulating every product on the internet in the same way because they use the same network.”
His comments address a distinction already present in U.S. institutional policy discussions. An Aug. 12 report covered US-UK tokenized finance recommendations published on July 14, including plans for a private-sector-led group to test cross-border transactions involving tokenized financial assets for one year.
According to that report, the recommendations called for the SEC, CFTC, Financial Conduct Authority and Bank of England to examine approaches to settlement finality, regulatory treatment and market infrastructure. They also proposed examining whether stablecoins and tokenized money-market funds could qualify as margin collateral at central counterparties, subject to separate agency decisions.
Ownership and promotion rules can target the political conflict
In describing how policymakers could preserve that distinction, Kirkley said rules should address officials using their position, likeness or influence to establish a financial interest from which they can personally benefit.
“The cleanest approach is to regulate the conflict directly,” he said.
Alongside ownership and promotion, his proposed framework would examine control, disclosure and financial benefit. In his assessment, those categories give policymakers a way to address the conduct at issue without extending political ethics restrictions to tokenized securities, stablecoin payments or institutional settlement infrastructure with no political connection.
Kirkley said the relevant question is whether public influence creates a private financial interest, while rules for other digital assets should respond to the risks of their actual uses. He argued that policymakers can protect public office through conduct-based restrictions while allowing financial-market products to develop under their applicable regulatory frameworks.
According to the company background provided with his comments, Kirkley is building settlement infrastructure for tokenized assets and stablecoins at GSN. The background also states that he has engaged with Congress on crypto and trade policy and with U.S. officials on crypto and deep-tech policy.
