- According to the US Treasury, certain aspects of the US crypto framework suit the global crypto market.
- The US wants to influence global regulation of digital assets.
On Thursday, the US Treasury issued a press release explaining why there should be equal regulation for the crypto industry globally. After an executive order by the US President in March 2022, the US Treasury released a document titled “framework for international engagement on cryptocurrencies.”
The executive order aimed to optimize the numerous opportunities in digital assets without too much exposure to its risks. The executive order stressed the essence of partnering with other regulators to lessen these possible risks. According to this framework, protecting businesses, consumers, and investors against exposure to crypto-asset risks is paramount.
However, it is also important that the crypto ecosystem is safe and stands on a solid footing. Hence, the framework suggested researching and issuing national digital currencies and other blockchain-related technologies that align with the appropriate values as the law permits.
The US Treasury claims that one reason for the enormous risks in the digital asset industry is the imbalance in compliance, regulation, and supervision. The US worries that current anti-money laundering policies in the digital asset space are inadequate.
Hence, it would be almost impossible to investigate claims of fraudulent crypto transactions. Also, there would be no way to prevent the illegal transfer of funds to overseas companies. The framework adds that maintaining the best regulatory policies requires the cooperation of governments and private authorities worldwide and the market participants in those places.
Also, these requirements are necessary for all market players to operate under the same conditions. Thus, many unbanked can access safe and efficient financial services. Consequently, domestic and international transactions become less expensive. The US is already in contact with many agencies in other regions to establish a standard and uniform crypto regulation worldwide.
Some agencies that have agreed to work with the US include the Financial Action Task Force (FATF), the World Bank, the Financial Stability Board (FSB), the G7, and the G20. The framework further adds that a standard-setting is critical to ensure that the crucial policies are included in any new systems. Such important policies include privacy, greater accessibility to secure and efficient financial services, and interoperability of financial transactions among nations.
Influencing the global crypto space
The framework repeated severally that the present administration prioritizes crypto regulation. That’s why the US Treasury developed a detailed crypto regulatory framework. Nevertheless, the US hasn’t clarified oversight functions over the crypto market.
There is no clear distinction between the aspects of the crypto market that the top two financial regulators (the Commodity and Futures Trading Commission, CFTC, and the Security and Exchange Commission, SEC) govern. The SEC continues to battle with crypto firms in court as it insists that all cryptos (except bitcoin) are securities. Hence, the agency can’t hold discussions with crypto market players. Thus, it can’t fulfill the proposals contained in the treasury’s framework.
Related: SEC’s Gary Gensler warns that the crypto regulation bill could undermine market protection