US Treasury Begins Public Consultation on How to Regulate Crypto
The US Department of Treasury is seeking public opinion on the “responsible development of digital assets.” Its questions focus on a variety of crypto-related aspects, including decentralized finance (DeFi), non-fungible tokens (NFTs), mixers, virtual asset service providers (VASPs), and the digital dollar.
Per the Treasury’s document, “in particular, the Department invites comments on the digital-asset-related illicit finance and national security risks as well as the publicly released action plan to mitigate the risks.”
The questions open for commenting include:
- Has Treasury comprehensively defined the illicit financing risks associated with digital assets?
- What are the illicit finance risks related to non-fungible tokens?
- What are the illicit finance risks related to DeFi and peer-to-peer (P2P) payment technologies?
- What existing regulatory obligations in your view are not or no longer fit for purpose as it relates to digital assets?
- What additional steps should the US government consider to combat ransomware?
- What additional steps should the US government consider to address the illicit finance risks related to mixers and other anonymity-enhancing technologies?
- How can Treasury most effectively support consistent implementation of global AML/CFT (Anti-Money Laundering and Counter Financing of Terrorism) standards across jurisdictions for digital assets, including virtual assets and VASPs?
- Are there specific countries or jurisdictions where the US government should focus its efforts, through bilateral outreach and technical assistance, to strengthen foreign AML/CFT regimes related to virtual asset service providers?
- How can Treasury most effectively support the incorporation of AML/CFT controls into a potential US CBDC design?
Comments can be submitted until November 3 and are part of the public record.
Many in the Cryptoverse, however, have long criticized the US government for heavily focusing on illicit uses of cryptoassets, disregarding any of its potential benefits.
The Head of Policy at the Blockchain Association Jake Chervinsky argued that it is the Terra/LUNA collapse that massively damaged the government’s already poor perception of crypto.
Meanwhile, the Treasury has requested comments from the public pursuant to the Executive Order of March 9 this year, “Ensuring Responsible Development of Digital Assets,” it stated. The order sought to create a framework of stricter and, as some argued, more coherent regulations for the crypto sector.
The order stated that the government “must reinforce the United States’ leadership in the global financial system and in technological and economic competitiveness,” a measure that includes “the responsible development of payment innovations and digital assets.”
It also called on a number of government agencies to report back to the executive with their proposals on how to govern the sector and create customer protection protocols within 90-180 days.
Therefore, this request for comments is not the only action that followed the March 9 executive order. As reported, in July this year, the Treasury presented President Joe Biden with a framework to facilitate international cooperation on introducing crypto regulations and standards at the international level.
The department said at the time that:
“What’s outlined in the framework is intended to ensure that, with respect to the development of digital assets, America’s core democratic values are respected; consumers, investors, and businesses are protected; appropriate global financial system connectivity and platform and architecture interoperability are preserved; and the safety and soundness of the global financial system and international monetary system are maintained.”
Then, just days ago, the Treasury Department submitted an action plan to the White House and publicly released its report. The coordinated action plan was developed by the Secretary of the Treasury, in consultation with the Secretary of State, the Attorney General, the Secretary of Commerce, the Secretary of Homeland Security, the Director of the Office of Management and Budget, the Director of National Intelligence, and the heads of other relevant agencies, the document noted.
The White House, therefore, released a “First-Ever Comprehensive Framework for Responsible Development of Digital Assets” last week, outlining the conclusions and recommendations of various federal agencies after six months of studying the crypto industry.