BitOoda Global & Regulatory Analysis, 2/17/2020: Is it too much to ask for a plan?
What are the policy direction and strategic objectives of U.S. digital asset regulation? One might think that would be a fairly straightforward question, and one that our national economic and technology leaders should be able to answer. But let’s look at the headlines from this week and see whether we can discern an element of cohesion:
1. The White House proposed moving the Secret Service back to the Treasury Department specifically to regulate cryptocurrencies more closely.
2. Treasury Secretary Mnuchin warned (or promised, depending on your perspective) that FinCEN would soon be issuing new regulations on crypto and digital payment systems to “improve” transparency.
3. As the SEC continued full speed ahead with its lawsuit against Telegram, a federal judge this week invited the CFTC to provide its views on the case. The fact that the judge needs to bring additional federal regulators into the discussion speaks volumes about the fragmentary state of the U.S. regulatory landscape.
4. A Federal Reserve Governor stated that the U.S. central bank is actively studying the feasibility of a digital national currency, while an independent group of central banks planned a meeting in Washington and is practically begging the U.S. to join the effort.
5. And of course we read with interest the reactions and opinions on SEC Commissioner Peirce’s safe harbor proposal.
So to summarize: (1) the White House and Treasury are increasing regulatory scrutiny, (2) one part of the SEC is proposing a safe harbor that could have covered the same activities that are the subject of an active lawsuit by another part of the same agency, and (3) the U.S. central bank is studying how to integrate digital assets into the country’s mainstream economic model while the rest of the world asks why we’re on the sidelines.
No wonder a recent survey by The Block found that regulatory uncertainty remains the biggest challenge for the U.S. digital asset market, with 91% of respondents citing it as a barrier. While we can applaud Commissioner Peirce’s ideas, the CFTC’s principles-based approach, and the one or two Fed governors and congressional voices who recognize the inevitability of digitization, the sheer number of government entities involved in U.S. crypto policy continues to preclude a cohesive national approach.
Unlike some other countries that have designed government-wide frameworks with legislative and executive measures to implement dedicated digital asset governance, the U.S.’s continued reliance on the SEC (hamstrung by decades-old securities laws) and Congress (stuck in a neverending political tailspin) has resulted in an amalgamation of federal and state-level bodies claiming a piece of the regulatory pie, creating barriers to entry that are stifling the ability of even the most compliance-focused firms to operate in the space. We at BitOoda nonetheless will continue to build and operate under our industry-leading regulatory stack and to drive the development of industry standards to propel the market forward. While we don’t mind a bit of whiplash, we look forward to a day when the U.S. regulatory community begins to speak with one voice.