U.S. Crypto Regulations Are Coming (Again)

Another run, another influx of regulations trailing to clean up the mess. I am not staunchly opposed to regulations in the industry — as laundering and scamming are issues that need to be addressed — however, some regulations today threaten the whole industry because they (1) give Congress broad powers never seen before (arguably unconstitutional) (2) the SEC sets itself up to adopt a broad definition of exchange that could lead to it directly affecting the industry (hello MORE federal lawsuits, trading restrictions, and VPNs). You can act by talking to your representatives but your time is limited.

There are two regulations in the works:

1. The COMPETES Act
2. The SEC’s Proposed Regulation ATS Amendment

First, in Title II of the COMPETES Act, Congress is granted special measures to ban exchanges and other financial institutions from engaging in cryptocurrency transactions. The special measures are granted to pursue bad actors engaging in “the proceeds of Chinese ransomware and/or declared a Primary Money Laundering Concern due to support to North Korea’s sanctions evasions.” However, the new proposal — — eliminates all public notice and comment requirements and eliminates the 120-day limitation for measures imposed without regulation. Does this not violate our constitutional rights to due process of law? While I do not directly disagree with the Act itself there is some opposition to it in the crypto community. Call your representative for your voice to be heard in this issue. https://www.house.gov/representatives/find-your-representative.

Second, the SEC has proposed an amendment to broaden the definition of what is considered a securities exchange, to include an alternative trading system for securities (ATS). The proposal provides new restraints on “communication protocols”. This means that various non-obvious crypto protocols could be securities, like etherscan, p2e projects, and yield farms. This sets up the entire industry to be regulated as securities, and could easily allow the SEC to control the lot of them in a swift and quick manner. Typically the SEC will allow 30 days for comment upon the proposal before it becomes law. Comment on a public proposal.

https://www.sec.gov/regulatory-actions/how-to-submit-comments.

While these changes in law seem to be minute, the industry is a frog being boiled in a pot of water. Don’t be afraid to let your opinions be heard.