Why U.S. Treasury asked for public comments on crypto regulation

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The U.S. Depart­ment of Trea­sury has asked the pub­lic to sub­mit com­ments on dig­i­tal assets, includ­ing cryp­tocur­ren­cies. The Trea­sury has invit­ed com­ments on the illic­it uses of cryp­to and the pro­posed action plan in par­tic­u­lar. The notice fol­lows the Exec­u­tive Order on 9 March 2022.

Well, the Trea­sury has asked peo­ple to sug­gest addi­tion­al steps the author­i­ties can exe­cute to address illic­it uses of cryp­tocur­ren­cy and decen­tral­ized finance and coor­di­nate its Anti-Mon­ey Laun­der­ing (AML) and Com­bat­ing the Financ­ing of Ter­ror­ism (CFT) policy. 

Stronger cypto regulation

The Trea­sury fur­ther added,

“Illic­it activ­i­ties high­light the need for ongo­ing scruti­ny of the use of dig­i­tal assets, the extent to which tech­no­log­i­cal inno­va­tion may impact such activ­i­ties, and explo­ration of oppor­tu­ni­ties to mit­i­gate these risks through reg­u­la­tion, super­vi­sion, pub­lic-pri­vate engage­ment, over­sight, and law enforcement.” 

The Exec­u­tive Order named “Ensur­ing Respon­si­ble Devel­op­ment of Dig­i­tal Assets” was issued on 9 March by US Pres­i­dent Joe Biden. 

It out­lined the objec­tives of the gov­ern­ment in regard to the reg­u­la­tion of dig­i­tal assets. These objec­tives include (i) con­sumer and busi­ness pro­tec­tion, (ii) safe­guard­ing finan­cial sta­bil­i­ty, (iii) mit­i­gat­ing illic­it activ­i­ties, (iv) rein­forc­ing Amer­i­can finan­cial lead­er­ship, (v) pro­mot­ing safe and afford­able finan­cial ser­vices, and (vi) sup­port­ing tech­nolo­gies for dig­i­tal assets’ development.

Fol­low­ing this March order, the White House recent­ly released its first-ever com­pre­hen­sive frame­work for the respon­si­ble devel­op­ment of dig­i­tal assets on 16 September. 

It encour­ages reg­u­la­to­ry bod­ies such as the Secu­ri­ties and Exchange Com­mis­sion (SEC) and the Com­mod­i­ty Futures Trad­ing Com­mis­sion (CFTC) to aggres­sive­ly inves­ti­gate and enforce action against cryp­tocur­ren­cy-relat­ed unlaw­ful practices.

Industry criticism

That being said, the lead­ing mem­bers of the indus­try crit­i­cized the approach of the gov­ern­ment towards cryp­tocur­ren­cy and oth­er dig­i­tal assets.

The Blockchain Asso­ci­a­tion tweet­ed that the order of the admin­is­tra­tion is a missed oppor­tu­ni­ty to cement Amer­i­can lead­er­ship in the cryp­tocur­ren­cy indus­try. It said that the reports focus more on the risks posed by cryp­to instead of its benefits. 

The Cryp­to Coun­cil for Inno­va­tion tweet­ed that the order fol­lows an out­dat­ed and unbal­anced under­stand­ing of the tech­nol­o­gy. “Reg­u­la­tion by enforce­ment is not reg­u­la­to­ry clar­i­ty,” it added.

It was after such wide­spread crit­i­cism that the Trea­sury decid­ed to invite pub­lic com­ments on its approach.

The pub­lic can sub­mit the com­ments until 3 Novem­ber 2022.

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