US authorities issue new guidelines on crypto regulation
New US Crypto Regulatory Guide
The US government has just issued a new regulatory framework for the cryptocurrency market. The framework covers watchdogs such as the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC), but has not specified which agency is in charge of which sector.
However, the newly issued guidance is one of the most comprehensive regulatory frameworks, covering everything from protecting investors and promoting financial stability to the role of the US in the global financial system. .
This is considered the first complete guide to regulations for the cryptocurrency sector.
Here, let's take a look at the most important points in this new guide with Fox Crypto News!
Some of the most important points
Eliminate illegal financial practices
An important part of the latest guidance on the crypto industry is focused on eliminating illegal activities and behaviors.
According to the announcement:
“The President will evaluate whether to call on Congress to amend the Bank Secrecy Act, anti-tipping laws, and anti-money laundering laws – to include regulations for banks.” providing digital asset services.
These providers include digital asset exchanges and NFT platforms.”
Thus, according to the US, digital asset service providers include crypto exchanges and NFT marketplace platforms. Currently, there are no clear regulations for the activities of these suppliers, but the US administration, or specifically President Biden, is considering adjusting the relevant laws to have more detailed regulations.
The president is also considering whether to push Congress to increase penalties for illegal money transfers and amend several federal laws related to digital assets.
The next steps to be taken include:
“The Ministry of Finance will complete the illegal financial risk assessment of decentralized finance (DeFi) by the end of February 2023 and the assessment of NFT by July of the same year.”
Likely to have CBDC
CBDC or digital currency issued by a Central Bank. This is a concept that has been around for a long time in the cryptocurrency market, and is being tested by several countries. China is a pioneer in developing CBDC today.
On the US side, the country's officials have not previously confirmed whether the US will issue CBDCs or not. However, in this latest guidance, the White House has affirmed the potential to derive “significant benefits” from CBDCs.
“CBDC can enable a more efficient payment system, fuel technological innovation, facilitate faster and more environmentally sustainable cross-border transactions.”
Essentially, CBDCs are similar to today's 1:1 pegged stablecoins to the US Dollar. But the most important difference is that CBDC is fully accepted and supported by the government. At that time, users who use CBDC as a digital USD, will not need to worry about whether this currency is legally recognized or not, or whether its USD reserves are full or not.
The new guide states:
“CBDC can promote financial inclusion on all fronts, providing financial fairness because CBDCs make finance accessible to everyone.”
Therefore, the administration urges the Fed to continue researching, testing and evaluating CBDCs.
However, the possibility of the US issuing a CBDC will present many challenges for existing stablecoins such as USDT and USDC.
Stablecoins are still in the spotlight
In addition to the challenge from the CBDC, stablecoins also face authorities warning that the development of stablecoins will affect the stability of the US financial system.
The fact that stablecoins can be used to transfer money across borders without central bank supervision has worried many countries, and the US is no exception.
These concerns were heightened after the collapse of LUNA-UST, which affected not only the crypto market but also the traditional financial system.
The White House affirms:
“Digital assets and the traditional financial system are becoming more and more intertwined. Therefore, once the digital asset market fluctuates, it will also affect the US financial system.”
To make stablecoins “safer,” the administration said the Treasury Department will work with financial institutions to strengthen the identification and mitigation of vulnerabilities in the market. In its latest action, the U.S. Treasury Department recommends “doubling up” the enforcement of cryptocurrency regulation by stakeholders.
Thus, it can be seen that the latest guidance of the US government has quite fully covered the crypto field. Of course, this is just a guideline framework, highlighting outstanding issues that need to be resolved, but not giving too many specific regulations.
In particular, the White House has yet to designate whether market oversight belongs to the CFTC or the SEC. The new guidelines also do not specify which agencies directly, but only relevant ministries.
Still, this is a hugely important step forward in crypto legislation in the US – for the first time there is such an extensive guide dedicated to the industry. This shows that the US government is extremely interested in the crypto market and the authorities are starting to have specific regulations for the industry, not letting crypto be the "Wild West" as before.
Based on the newly issued guidance, agencies will continue to submit bills on specific regulations for each segment in the near future. This process is lengthy and will take months, even years. However, this is completely welcome for cryptocurrencies.
Fox Crypto News summary
Sep 16, 2022