US Crypto Regulation Roundup

by | May 1, 2022

Crypto Regulation

The rapid mainstream adoption of crypto assets in recent years has increased the pressure on regulatory agencies to draw up appropriate crypto regulations to deal with the legal complexities of their use.

In the US, at a federal level, work is centered around proposals from various regulators, including the SEC, CFTC, IRS, OCC, and FinCEN. The US Treasury, Federal Reserve, Justice Department, Commerce Department, and lawmakers coordinate with these agencies to ensure appropriate consumer protections.

Not to be overshadowed, regulatory proposals have also ramped up at the state level, with pending legislation regarding crypto assets across 37 states for the 2022 legislative session.

Recent Regulatory Developments

Executive Order

In March 2022, President Biden signed an Executive Order on Ensuring Responsible Development of Digital Assets. It laid out a comprehensive strategy for the federal government’s treatment of crypto assets, described as “the first-ever, whole-of-government approach to addressing the risks and harnessing the potential benefits of digital assets and their underlying technology.”

The Executive Order requires various agencies and government departments to report on potential industry regulation that protects US leadership in the crypto field, promotes broader access to a future financial system, and examines the role of law enforcement. It also calls for the Federal Reserve to move forward with urgent research and development for a Central Bank Digital Currency.

Federal Legislation

Perhaps surprisingly, Congress introduced 35 bills focused on crypto policy in 2021. The Infrastructure Investment and Jobs Act made the most headlines and was signed into law in November. It aims to increase infrastructure spending, partly funded by imposing reporting requirements on “crypto brokers” for transactions over $10,000 by 2024.

However, the broad definition of a broker within the bill caused significant backlash from the crypto community, with specific concern over how hardware and software providers could get caught up in the language. Though the original definitions remained in place, the debate demonstrated the industry was here to stay, with additional bills aimed at repealing or amending the provisions introduced shortly after.

The Biden administration also released a report around the same time, including specific proposed legislation for stablecoins, a type of crypto asset pegged to the US Dollar. It aims to classify stablecoin issuers as banks and enforce similar consumer protection oversight.

Another significant bill, the Eliminate Barriers To Innovation Act, aims to create an SEC and CFTC Working Group on Digital Assets to report to Congress and clarify token remits between the agencies. Additionally, US Senator, Cynthia Lummis helped launch a Financial Inclusion Caucus, which highlights how digital assets and Fintech can make financial markets more inclusive and safe for all Americans. This is on top of Lummis’ now renowned forthforming crypto regulation bill that will, as she puts it, “fully integrate digital assets into our financial system.”

State Legislation

Meanwhile, in the absence of federal regulations, crypto lobbyists have found more willing lawmaker partners at the state level. In Florida, for example, new money-transmission legislation aims to make it easier to buy and sell crypto assets. Other state proposals include bills to exempt crypto from securities laws, and Arizona is going as far as debating the inclusion of Bitcoin as legal tender