Update: July 4th - 17th, 2022
The US Treasury delivered a framework for international engagement on digital assets...
Welcome back,
These past two weeks did not have many major crypto regulatory developments. However, I want to bring your attention to a few key news stories.
I hope you enjoy and see you soon.
-Katja
July 4th - 17th, 2022
The US Treasury delivered a framework for international engagement on digital assets.
As the document outlines, it is “a framework for interagency engagement with foreign counterparts and in international fora as directed in the President’s Executive Order on Ensuring Responsible Development of Digital Assets (March 9, 2022).” The framework emphasizes the need to cooperate in creating international standards concerning such topics as anti-money laundering regulation and enforcement, CBDCs development, financial stability, and consumer protections, among others.
As part of this cooperative effort, the document points to a number of international organizations including G7, G20, Financial Stability Board, Organization for Economic Cooperation and Development, and International Monetary Fund as potential partners in helping to push this approach abroad.
[The Financial Stability Board, an international body that monitors financial systems, will provide recommendations on crypto regulation to the G20 in October.]
In addition to the framework, the Treasury also released a notice requesting public comments on potential risks and benefits with digital asset adoption. Such requests have gained traction in various parts of government. The American Bankers Association, a major trade association representing banks in America, responded to The Commerce Department’s request for public commentary by issuing a warning against CBDCs. Several members of Congress sent a letter to the Department of Energy (DOE) and Environmental Protection Agency (EPA) urging regulators to require crypto miners to disclose information about emissions and energy use.
In other US news,
The Securities and Exchange Commission (SEC) Chair Gary Gensler said that the SEC could tailor disclosures for crypto companies while maintaining investor protections.
The Office of Government Ethics barred US officials (all White House staff and employees of all federal agencies - including the Federal Reserve and Treasury Department) who have personal investments in crypto to work on legislation related to digital assets.
England continues to gather information and develop its crypto regulatory framework.
The Treasury Committee of UK’s House of Commons put out a call for evidence (similar to the request by The US Treasury) to evaluate the risks and opportunities of crypto-assets, impact of distributed ledger technology on existing institutions, and consumer protections. The government has also called for public comments on decentralized finance (DeFi) taxation and plans to introduce stablecoin legislation later this summer.
In addition to this, the Bank of England’s Financial Policy Committee pushed for greater regulatory clarity while reporting that crypto does not pose a threat to the stability of broader financial markets. Jon Cunliffe, deputy governor for financial stability at the Bank of England, emphasized these same points in his recent speech,
“Crypto – technologies offer the prospect of substantive innovation and improvement in finance. But to be successful and sustainable innovation has to happen within a framework in which risks are managed: people don’t fly for long in unsafe aeroplanes”
[This news comes at the time of Boris Johnson’s resignation as the UK Prime Minister, making the future direction of crypto in the country uncertain.]
The European Central Bank (ECB) warns EU members about potential regulatory overlaps.
In preparing to implement the MiCA framework, regulators from 19 EU member states will reportedly attend a supervisory meeting later this month to discuss the regulatory package. EU officials now have 18 months to assess the framework before its implementation.
[For more information, see this article or my discussion of MiCA.]
In addition to this, the ECB also released a report on crypto, which mainly focused on its risks as they relate to the climate, stablecoins, and DeFi. As part of its recommendations, the bank advises against crypto mining and stablecoins. This push away from crypto is interesting considering the bank’s ongoing investigation of a digital euro.
As for stablecoins, the Bank for International Settlements (BIS) Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) issued guidance on the principle of “same risk, same regulation.” In a real-world use-case, Argentinians have turned to stablecoins for refuge amid growing economic turmoil after Argentina's economy minister, Martin Guzmán, resigned.
Paraguay’s Senate has passed a major crypto bill concerning a tax and regulatory framework.
As CoinTelegraph reported, “the bill pertains specifically to crypto mining, commercialization, intermediation, exchange, transfer, custody, and/or administration of crypto assets or instruments that allow control over crypto assets.” In addition to this, the bill may also have provisions to monetize Paraguay’s energy resources. This bill is now one step away from being signed into law by President Mario Abdo Benítez.
More news …
Russia cracks down on crypto monitoring, and Putin signs a bill that essentially bans using digital assets as payments.
The Monetary Authority of Singapore (MAS) considers more restrictive crypto regulations by placing limits on retail participation for investors.
South Africa looks to introduce a crypto regulatory framework while also looking to experiment with CBDCs.
Kazakhstan and India look to introduce new crypto tax provisions.
Brazil has put its crypto bill vote on hold until after its October presidential elections.