BitOoda Regulatory Analysis, 3/23/2020: Considering potential impacts of the coronavirus on digital asset regulation
Two weeks ago on March 9, U.S. Representative Paul Gosar introduced the ‘Crypto-currency Act of 2020.’ The bill defines digital assets as crypto-commodities, crypto-currencies, or crypto-securities and establishes the ‘primary regulator’ of these assets as CFTC, FinCEN, and SEC, respectively.
In the 14 days since the bill was introduced, the world has changed. As the U.S. Senate struggles to pass the stimulus package that our country so desperately needs, we see no need to dive into an analysis of the substance of the proposed bill or revisit the pace and direction of legislative activity on digital assets, despite our belief that congressional action such as this proposed bill is critical to the integration of digital assets into a modernized U.S. regulatory framework.
As we continue to monitor and react to the effects of the outbreak, we forced ourselves to take a moment to think about what the impact of this pandemic could have on digital asset regulation, both in the U.S. and around the world.
· Will regulatory agencies extend the pragmatic approach they have admirably shown since the outbreak began, and adopt a more forward-looking perspective on the increasingly-digital economy? Or will the impact of the virus cause regulators to tighten their risk tolerance in light of the significant and ongoing macroeconomic shifts?
· Will worries about the use of cash and physical payment instruments encourage regulators to take a more comprehensive approach to governing digital assets as part of the new norm for day-to-day economic activity?
· Depending on how the longer-term impacts of the virus manifest in Asia and Europe, will the 117th (post-election) Congress be more willing to take steps to ensure the U.S. keeps pace on digital asset regulatory and technological advancements?
· Will global bodies and central banks be more willing to embrace stablecoins and CBDCs as a tool for enhanced financial stability during crises?
These are a few very preliminary questions we have begun to discuss with our colleagues, clients, and partners. Of course we have no clear indications yet of how the outbreak will shape the regulatory environment in the medium-to-long term. For now, we encourage you to reach out to us to discuss strategies to manage this continued period of heightened risk and uncertainty.