Treasury reports on digital assets contain recommendations for aggressive enforcement actions, paired with additional guidance from market regulators for crypto projects. These reports do not recommend legal changes to accommodate cryptocurrency.
The U.S. Treasury Department recommends that financial market regulators aggressively pursue investigations into and enforcement actions against projects dealing with digital assets that don’t comply with existing laws. This recommendation is consistent with the current approach regulators take.
One of the Friday reports, part of a larger effort to create a federal unified approach to digital assets, recommends that regulators develop additional rules and guidance for projects who want the law to be followed. This may result in a shift in the approach of financial watchdogs. They are now trying to emphasize a carrot that provides more specific guidelines and legal action for companies that don’t comply with them.
Treasury Official say agencies need to push harder on regulation
A senior Treasury official stated that agencies should “double down” on current regulation during a Thursday press conference previewing reports. The reports were ordered by President Joe Biden. As a condition of answering questions, senior administration officials were asked to speak freely without direct attribution.
Treasury calls for more enforcement but also asks regulators for additional guidance to digital asset developers and companies involved with cryptocurrencies. This will help them better understand the rules. This clarity could reduce future enforcements, in theory. This may be good news for industry advocates.
The senior Treasury official stated that one of the recommendations was that regulators would issue new guidance and rules. “This is a recognition of the need for work in this area.”
Financial regulators work independently from the white house
The U.S. financial regulators operate largely independently of the White House. However, the president nominates the leaders of different agencies such as the Securities and Exchange Commission and Commodity Futures Trading Commission. These are the primary American regulators for digital assets. As they consider ways to integrate cryptocurrencies into existing financial laws, the reports will be discussed with Capitol Hill and agency leaders.
A senior official stated that “This is a rapidly evolving product space.” “Regulations must be able adapt to the new products and activities being offered.”
Although Treasury’s recommendations place emphasis on regulatory guidance and rulemaking, officials stated that the reports do not contain specific legislative proposals. Multiple bills have been introduced to amend current laws that impact cryptocurrencies on Capitol Hill. However, none of them are likely to be passed before the end this Congress.
A Hill official pledged to “work closely with us, to make sure that we are working hand-in-hand.”