US Treasury starts seeking public opinion on regulating crypto

On Tuesday, September 20, the United States Treasury began to seek the public’s feedback regarding the “responsible development of digital assets.” The questions being asked by the Treasury pertain to several areas of digital assets, such as non-fungible tokens (NFTs), virtual asset service providers (VASPs), and decentralized finance (DeFi).

The Treasury is welcoming comments from those who have a negative view of crypto and consider it a national security risk or a financial system used for nefarious activity. It is also gathering opinions on the action plan it proposed to mitigate the risks of cryptocurrency when used for illicit financing, especially in any exercise that threatens national security.

The questions being asked by the Treasury focus on the perception of illicit financial risks, whether existing regulations can be applied to digital assets, what steps the US should take to protect cryptocurrency from malware, how the office can ensure crypto is not being used to launder money or finance terrorism, and what the nation should do to address illegal activity masked by anonymity-enhancing tools.

Answers to these questions can be submitted through Thursday, November 3. All feedback received will be stored as a public record.

The Treasury’s action was prompted by President Biden signing an executive order on March 9, 2022. Called “Ensuring Responsible Development of Digital Assets,” the order called for the United States government to introduce digital assets and modern payment innovations responsibly into the nation’s financial systems. The creation of a central bank digital currency (CBDC) was also mentioned.

Other key elements of the order included stricter and more transparent regulations for the crypto industry. Federal agencies were tasked with developing proposals on how to govern cryptocurrency and then create these consumer protection measures in a time frame of 90-180 days.

On September 16, 2022, the US Department of the Treasury released an action plan in response to the order’s request. The proposal is comprised of three separate reports having their own sets of recommendations:

• The Future of Money and Payments
• Implications for Consumers, Investors, and Businesses
• Action Plan to Address Illicit Financing Risks of Digital Assets

The next steps to the US being a world frontrunner in the crypto verse could prove interesting as proponents criticize the government for its (mostly) poor perception of digital currency. Another conflicting principle is federal bodies calling for increased regulation of a financial system based on decentralization. While the US Securities and Exchange Commission chairman Gary Gensler feels that digital tokens are securities that should be registered by crypto asset firms, those who have made fortunes in this industry do not share the sentiment.