US issues NEW crypto regulatory guidelines

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2022-09-21 02:25:08

The US government recently issued a new regulatory framework for the regulation of cryptocurrencies. The core topics are related to behavioral finance, CBDCs and stablecoins.

On September 16, the US government issued a new regulatory framework for the cryptocurrency market. The framework designates supervisory bodies such as the Commodity Futures Trading Commission (CFTC) and the US Securities and Exchange Commission (SEC), but does not specify the role of each.

However, many assessments believe that the newly issued guidance is a relatively complete regulatory framework, when it comes to generalizing from protecting investors and promoting financial stability to the role of the US in the financial system. Global.

Key points in the new guidelines include:

  • Eliminate illegal financial behavior
  • The possibility of CBDC appearing in the US
  • Monitor Stablecoin developments

1 – Eliminate illegal financial behavior

The first highlight mentioned in the guide is the focus on eliminating illegal financial acts and activities.

“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.” – Notice clearly stated.

The US agencies target digital asset service providers including crypto exchanges and NFT marketplace platforms. Although there are no specific regulations for each activity of each of these groups of suppliers, President Biden is considering adjusting 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.”

2 – The possibility of CBDC appearing in the US

CBDC – a digital currency issued by a Central Bank – is a concept that has been around for a long time in the cryptocurrency market, and is currently being tested in several countries. In particular, China is the leading country in CBDC development.

On the other hand, US officials have not yet given an answer whether to 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.

3 – Follow Stablecoin developments

In addition to the challenge from the CBDC, the US government is now very wary of stablecoins because of what it does to the US financial system. Not only the US, many countries also put the stable into the spotlight because this digital currency can be used for cross-border money transfers without going through any central bank supervision.

In particular, after the catastrophic collapse of LUNA – UST occurred, this concern became more and more. The collapse of the entire Terra ecosystem affects not only the crypto market but also traditional finance.

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 U.S. Treasury Department will be tasked with working with other organizations to strengthen the identification and mitigation of vulnerabilities in the market.

Conclude

Compared with previous times, this guidance is a new step forward in market supervision by the US government. For the first time, a guide to crypto legislation in the US has been released, showing growing interest in setting industry-specific regulations.

The guide has been quite comprehensive about the field of cryptocurrencies, but it still stops at issues to be solved, not detailed regulations.

However, the White House has yet to specify whether market oversight belongs to the CFTC or the SEC. The new guidelines also do not specify which agencies directly, but only relevant ministries.

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 expected to take many months, even years. However, this is completely welcome for cryptocurrencies.

#issues #crypto #regulatory #guidelines

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