Opinions

SEC Cryptocurrency Approach ‘Measured,’ Chairman Clayton Tells Senate: United States regulators believe they have adopted a “measured yet proactive approach” to cryptocurrency regulation which aids both retail and institutional investors. That was the formal view of Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), who updated lawmakers on official policy on Dec. 10.

Speaking in testimony before the Senate Committee on Banking, Housing, and Urban Affairs, Clayton highlighted the potential of blockchain technology in helping market participants amass capital.

“As I have previously stated, I am optimistic that developments in distributed ledger technology can help facilitate capital formation, providing promising investment opportunities for both institutional and Main Street investors,” he said.

Summarizing, Clayton endorsed the SEC’s general tact on disruptive financial innovation:

“Overall, I believe we have taken a measured, yet proactive regulatory approach that both fosters innovation and capital formation while protecting our investors and our markets.”

CFTC Chairman Heath Tarbert Calls Out Two Major Issues With the ‘Vast Majority of Crypto’: Speaking at Harvard Kennedy School at a lecture series covering financial regulations, Heath Tarbert, Chairman of the U.S. Commodity Futures Trading Commission, addressed the agency’s current position on cryptocurrencies.

In short, he says he and his colleagues are still trying to understand the space, while also identifying two of the industries major issues.

“By and large, the two major problems, thus far, with the vast majority of crypto — or I should say ‘issues’ — are, number one, anti-money laundering and counter terrorist financing. So these are things that could, if done wrongly, subvert our AML/CTF.

So we recently issued a statement that was joint FinCEN, the SEC and the CFTC two Fridays ago essentially saying, ‘If you are one of our regulated entities, and even if you’re not dealing with products that we regulate, but you’re dealing with digital assets, cryptocurrencies, etc., you’ve got to apply the anti-money laundering laws, the Patriot Act, etc., to those. So we were very clear on that point. The second issue has been investor protection. These ICOs [initial coin offerings] — people are issuing these so-called ‘cryptocurrencies, assets’ and they may be nothing more than fraudulent schemes. So those are the issues thus far.”

ECB Chief Christine Lagarde Says Central Bank Will Accelerate Taskforce Efforts on Digital Currencies, Draws Line on Bitcoin: Speaking at a news conference in Frankfurt following her first address as the new president of the European Central Bank (ECB), Christine Lagarde mapped out her plans to steer the bank’s taskforce on a digital currency.

Lagarde, who stated that “central bank digital currency is coming alive” and called for regulatory support of digital currencies during her tenure as head of the International Monetary Fund, believes the ECB should be “ahead of the curve” in using new technologies to advance traditional banking systems and procedures.

Lagarde says that while the mandate of monetary policy is price stability, the timing is now to reexamine how to achieve it.

“I think it is timely, coming to this job new, and it’s just the most appropriate moment to rally support of members around the table to reexamine the effectiveness, appropriateness of each and every single instrument that we’ve used in the past — to take assessment of that. And to then redefine for ourselves what exactly will be this medium-term objective that will deliver on the mandate that we have which is not changing…the mandate is price stability. The way in which we deliver the mandate is the one that will be under the strategic review.”

Congressman Warren Davidson Spotlights Critical Juncture for Future of Bitcoin, Crypto and Blockchain in the US: With Bitcoin and cryptocurrencies set to close out another year without a solid regulatory framework in place in the US, Congressman Warren Davidson, a crypto advocate who introduced the Token Taxonomy Act of 2019 in April, says blockchain will be huge for the US economy in much the same way Silicon Valley has been a driver of new technologies and a massive producer of jobs.

Despite Mark Zuckerberg and his crypto project Libra grabbing headlines earlier in the year, bringing primetime attention to blockchain and crypto, Davidson says people in the space should invite lawmakers and congressional staffers to as many industry events as possible to help educate influencers and policymakers on the issues.

In a new episode of Off the Chain with Morgan Creek Digital co-founder Anthony Pompliano, Davidson takes a look at 2020 and plots the political hurdles of moving his bill forward.

“There are people that are not going to shift their minds. Right now, Brad Sherman in Los Angeles just became the Chairman of the Subcommittee on Capital Markets. Well, for this bill to go forward, it has to get through that subcommittee or around it. So we either need him to change his mind or not be in the way, or we need Maxine Waters to say, ‘Look, I care enough about this bill. We’re moving it.’ And she has that power, clearly, as Chairwoman of the Committee.”

You can listen to the full podcast here.

FinCEN Director Notes Improved Oversight of Cryptocurrency Industry: The director of the Financial Crimes Enforcement Network (FinCEN) says the cryptocurrency industry has begun to fall in line with the agency’s regulations on money transmission services.

In a speech delivered at the American Bankers Association/American Bar Association Financial Crimes Enforcement Conference on Dec. 10, Kenneth A. Blanco claimed that FinCEN’s May 2019 guidance was having a marked and positive impact on its oversight of the crypto space.

There has also been an increase in reporting of customers conducting crypto transactions with wallets linked to darknet marketplaces, as well as on activity that appears characteristic of scam victims — particularly novice crypto users, including the elderly. Blanco closed his remarks with an appeal to businesses that are yet to abide by the agency’s guidance:

‘I think it is important for all financial institutions to ask themselves whether they are reporting such suspicious activity. If the answer is no, they need to reevaluate whether their institutions are exposed to cryptocurrency.”

Steven Mnuchin Does Not Expect US to Issue Digital Dollar in Next 5 Years: United States Secretary of the Treasury Steven Mnuchin said that he and Federal Reserve Chairman Jerome Powell do not anticipate the development of a national digital currency in the country.

Mnuchin delivered his comments during a House Financial Services Committee hearing in Washington, Bloomberg reported on Dec. 5. “Chair Powell and I have discussed this — we both agree that in the near future, in the next five years, we see no need for the Fed to issue a digital currency,” Mnuchin said. The Treasury secretary’s statement came in response to a question about Facebook’s yet-to-be-released Libra stablecoin. Mnuchin further said that he has no objection to Libra, as long as it is fully compliant with bank secrecy and Anti-Money Laundering regulations, so that “In no way can this be used for terrorist financing.”

A panel of senior financial regulators in the United States headed by Mnuchin warned the public about the purported risks of stablecoins and cryptocurrencies. The regulators stated:

“If a stablecoin became widely adopted as a means of payment or store of value, disruptions to the stablecoin system could affect the wider economy. Financial regulators should review existing and planned digital asset arrangements and their risks, as appropriate.”

Op Ed: IRS Doesn’t Get Cryptocurrencies: Here’s Why by Robin Singh, the founder of Koinly — a cryptocurrency tax solution that makes it easy for crypto investors to generate their income and capital gains reports.

Economic Uncertainty, Restrictions in Argentina Show Power of Bitcoin by Landon Manning for Bitcoin Magazine.

Justin S. Wales on How the First Amendment Protects Bitcoin: