What’s Next for Crypto Regulation
Treasury Department: Angry about the coverage
This week, the Treasury Department’s Financial Finimes Enforcement Network, known as FinCEN, extended the comment deadline for proposed reporting rules for digital wallet transactions designed to prevent money laundering by 60 days. The step, first announced on December 23, with a 15-day comment period, sparked outrage in the crypto community. The regulator has given in twice and noted the “robust” commitment, what after what opponents of Steven Mnuchin, then Treasury Secretary, dubbed the “midnight rulemaking”.
It turned out that the crypto industry could force a pivot through a powerful agency. They argue that the proposed disclosure and record-keeping requirements are “arbitrary and unjustified,” as Twitter and Square’s Jack Dorsey wrote in a comment:
The incongruity between the treatment of cash and cryptocurrency as proposed by FinCEN will prevent the adoption of cryptocurrency and compromise people’s privacy. However, the rule does not explain the difference in risk.
The win does not guarantee that the new Treasury Secretary Janet Yellen will change gears on this matter. At her confirmation hearing, she suggested that many cryptocurrency transactions were linked to illegal activity, which Ms. Smith of the Blockchain Association described as a “very disappointing response.” In a written testimony released later, Ms. Yellen offered a more nuanced view, saying regulators should “look closely at how to encourage their use for legitimate activities while restricting their use for malicious and illegal activities”.
The CFTC: act quickly
Chris Brummer, professor of Georgetown Law and “fintech guru”, is about to become the next commissioner of the CFTC. Picked for the same appearance in 2016, his nomination was withdrawn by the Trump administration. Since then, Mr. Brummer has testified before Congress about blockchain guidelines, edited an online journal and book on crypto assets, and written a textbook called Fintech Law in a Nutshell. In other words, he’s an expert.
Whoever takes on: “Knowledge cannot close the big regulatory loopholes.” Mr. Massad from Harvard said. In his view, the nearest financial regulators, as crypto-savvy as they are, cannot solve the problems posed by new technology without a comprehensive digital asset law. Otherwise, too much crypto activity will remain unregulated for too long.
A possible example of this is the CFTC’s prosecution lawsuit filed in the fall accusing BitMEX, a cryptocurrency exchange, of operating an unregistered trading platform for the sale of crypto derivatives. It is accused of having transactions that have earned more than $ 1 billion in fees since 2014 without enabling “the most basic compliance procedures”. BitMEX owes an answer next month. In an accompanying criminal case, the Ministry of Justice claims that BitMEX has deliberately violated the rules for combating money laundering.