Crypto Corner: Getting Serious About Crypto Safety

Last week, we left off by introducing the CFTC and discussed protections being put into place to shape the safety and accessibility of the cryptocurrency space for the average person… so, let’s jump right back in and get down to the nitty gritty of how this is unfolding before us.

To combat predatory and criminal conduct in the crypto space, a network of over 150 federal prosecutors called the Digital Asset Coordinator Network (DAC) was just announced by the Department of Justice. Assistant Attorney General Kenneth Polite Jr. has assured us that the establishment of this network will ensure that “prosecutors are best positioned to combat the ever-evolving criminal uses of digital asset technology.”

The DEC will be composed of federal prosecutors from U.S. Attorney Offices nationwide and the department’s litigating components, with each acting as their office’s subject-matter expert on digital assets. Each will provide legal and technical information around crypto. The key here is knowing that these safeguards are being put into place, not so much focusing on the smaller details… especially since this is a first in the blooming space.

Also, as we move through this article, it’s important to remember that in implementing these safeguards, the Biden administration has six key goals outlined for the safety of the crypto space: consumer and investor protection, financial stability, countering illicit finance, U.S. leadership in the global financial system and economic competitiveness, financial inclusion, and responsible innovation. Through the implementation of the DAC, we’ll only be that much closer to these goals.

The Framework

In addition to the establishment and launch of the DAC, the Biden administration has released a Crypto Asset Regulatory Framework for user and investor protections. The framework encourages the financial services industry to evolve toward seamless transactions, along with guidelines for cracking down on fraud in the digital asset space. The framework also touches on the SEC and CFTC, and the role each will play in working toward Biden’s goals.

While the SEC and CFTC are still hammering out fine details, this framework is pivotal. In preparation, the CFTC is looking forward toward planned actions, sharing those with congress recently in a legislative hearing before the U.S. Senate Committee on Agriculture, Nutrition, and Forestry. According to the CFTC, they’ll be working with protections in the crypto market with “full oversight capabilities” as long as current proposed legislation is passed.

Right now, multiple bills are in the pipeline… all working together to bring protections to the crypto space. We have Representative Glenn Thompson’s bipartisan Digital Commodity Exchange Act of 2022 (H.R. 7614), the Lummis-Gillibrand Responsible Financial Innovation Act (S. 4356), and the Digital Commodities Consumer Protection Act of 2022 (S. 4760)… to name a few.

These bills cover a gambit of things, including the aforementioned federal regulatory framework, authorization of bodies to regulate the trading of digital assets, a possible regulatory regime for stablecoins, who has the authority to decide what counts as a digital commodity, the environmental effects of cryptocurrencies, and even the ability to put time restrictions on fossil-fuel intensive crypto mining.

What does all this activity tell us? That the Biden administration is serious about protecting users, investors, and the country at large when it comes to the crypto space. It would seem that, in conjunction with the recent explosion of crackdowns in the space, we’re finally realizing that crypto is here to stay, it has intertwined itself with our financial markets, and that we’ll need to make sure it’s safe and accessible if we plan to stay ahead of the curb.

Watch This Space

Now, it might be time for those in the crypto space to shift gears… instead of the constant launch of new coins and the turmoil we’ve witnessed, they’ll need to focus on how to move forward in a safer space with more guardrails and oversight. They’ll need to shift to making sure their operations are solid, safe, and able to deliver when it comes to asks from authorities and users that their “money” be something that can actually be used and invested in.

As we move forward, we can expect to see continued and ramped-up actions against unlawful practices, unresolved consumer complaints, deceptive or abusive behaviors, and other general shenanigans in the space. As time passes, eventually, crypto will no longer be this niche space where only those who are “in” can participate… this is the evolution the crypto space needs to be able to ride side-by-side with legitimate fiat currency.

So, hold tight folks, the time when the promise of crypto for all can be an actuality is approaching. We can see it in the distance, and it’s going to open up a whole new world of investment opportunities. Please join us next week, we’re glad to be able to bring you the information and research you need to make your decision about the crypto space… and that’s what we’ll keep doing.