BitOoda Regulatory & Geopolitical Analysis, 6/29/2020: The growing cost of U.S. digital asset regulatory conservatism
Among this week’s notable stories in the regulatory sphere, we saw:
· New York’s Department of Financial Services (DFS) launch a series of proposals to refine and modernize its BitLicense program,
· The European Union announce the development of a new EU crypto regulatory regime, and
· The FATF hold its annual plenary where the group discussed the implementation of new global standards for virtual asset service providers.
We also noted another upcoming Congressional hearing on “The Digitization of Money and Payments” and the continuation of a nascent debate between the Fed and the crypto community on whether or not Bitcoin is a new type of money.
While an optimist might look at these developments all as positive advancements for the digital asset ecosystem, we cannot help but note once again the disparity between the proactive regulatory initiatives being taken around the world by multinational organizations and individual countries (most recently including the East African island nation of Mauritius), as well as here in the U.S. at the state level, in contrast to the conservative and ineffective approach by U.S. national leadership.
Please forgive our negativity and the frequency with which we harp on the fact that the U.S. is losing the global race to lead the way forward for the global digital economy, the continued absence of a coherent framework for digital asset governance, and the need for a national digital asset strategy to maintain U.S. global economic leadership and the position of the Dollar as the world’s reserve currency. And we certainly recognize that the EU’s potential new regulatory regime could include stricter requirements for crypto activities within the bloc, the BitLicense has been neither praised nor emulated since its establishment 5 years ago (though we applaud DFS’s new efforts to make the system more supportive of and adaptive to industry needs), and the FATF’s Travel Rule was by no means well received by digital asset firms around the world.
Nonetheless, we continue to believe that the digital asset ecosystem will increasingly be centered around regulated firms and that market activity already is migrating toward regulated platforms, and we believe that broad institutional adoption and participation will further accelerate as regulatory uncertainty diminishes, which is dependent on proactive steps at the U.S. national level to put a comprehensive legislative and regulatory framework in place.
We formed BitOoda’s regulatory stack to enable our clients to compliantly navigate and engage in the range of financial offerings in the digital asset markets across assets and regulatory jurisdictions. While we look forward to someday operating under a more effective national framework, we continue to expand our suite of fully-compliant products and services for today’s market participants, and we encourage clients and prospective partners to contact us to discuss our latest initiatives and strategies.