Players, observers, lobbyists and lobbyists view this as a critical moment for Crypto and its influencers. If it succeeds or does not succeed in convincing the officials, a decision will be made as to whether the regulation will allow the digital gold rush to accelerate or to slow it down to a sputtering.
What’s at stake?
Here are four of the big problems facing crypto lobbyists:
Call. The impression that crypto facilitates crime is voiced with some frequency by lawmakers and regulators and remains a significant hurdle to legitimacy. The first commissioned publication from the Crypto Council is an analysis of the illicit use of Bitcoin and concludes that concerns are “vastly overrated” and that blockchain technology could be better used by law enforcement agencies to stop crime and provide information to collect.
Reporting requirements. The new anti-money laundering rules passed this year will significantly expand the information available on digital currencies. The Treasury Department has also proposed rules that require detailed reporting for transactions over $ 3,000 that are “non-hosted wallets” or digital wallets that are not associated with a third-party financial institution and that require institutions that use cryptocurrencies manage, process more data. The Financial Action Task Force, an intergovernmental monitoring and standardization body, recently presented a draft guideline on virtual assets that would require service providers to provide further information.
Securities Uncertainties. When is a digital asset a security and when is a commodity? Technically not a mystery, this question has puzzled regulators and innovators for some time. Bitcoin and other cryptocurrencies shared over a decentralized network are generally considered commodities and are less regulated than securities that represent a stake in a company. Tokens released by individuals and companies are more likely to be classified as securities, as they more often represent a participation in the issuer’s project.
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The Securities and Exchange Commission sued Ripple Labs in December, accusing them of selling unregistered securities in the form of a token called XRP. Ripple insists that XRP is a commodity. A decision in this case can prove to be a turning point in determining how to properly characterize cryptocurrencies in the future.
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This week, an SEC commissioner, Hester Peirce, released an updated “safe haven” proposal that would allow developers a grace period to issue a token without fear of mischaracterization and keep regulators informed. “The idea is to give people a three-year runway,” said Ms. Peirce.
Catching up with China. The Chinese government is already experimenting with a digital currency from the central bank, a digital yuan. China would be the first country to create a virtual currency, but many are considering it. Some crypto proponents fear that China’s speed in space threatens the dollar, national security, and American competitiveness.
In business today
Updated
April 16, 2021, 1:30 p.m. ET
For more information, see our previous weekend edition on the future of crypto regulation.
Meet me in the lobby
“In any new industry, Washington is not easy to find out,” said Ms. Peirce, the SEC commissioner. Entering a highly regulated industry like finance and talking about technologies that few officials understand only compound the difficulty for the crypto crowd.
Since joining the SEC in 2018, Ms. Peirce has been a vocal supporter of the blockchain in both the halls of power and crypto insider circles, sharing her thoughts on important topics such as when there will finally be an exchange-traded Bitcoin fund in the United States there will be states. (Not soon enough from their point of view, but maybe soon.)
As the sector matures, some things become simpler, even as the landscape of actors becomes more complex. Blockchain companies will increasingly speak to regulators who understand their language, Ms. Peirce said, as new SEC chairman Gary Gensler, a former MIT professor who taught crypto classes, happened to be confirmed on the day Coinbase was listed .
