- Gary Gensler, Caitlin Long, and Peter Van Valkenburgh debate the necessity of crypto regulations.
- A new act may take over the state-level regulations presently in effect.
Regulations in the cryptocurrency market have been a hot topic lately. Though there are already plenty of countries that already have their regulations in place, the United States is a little more complicated. Only yesterday, the topic arose in articles after the former chairman of the Commodity Futures Trading Commission, Gary Gensler, commented that federal regulations are a positive development for the crypto community.
Gensler, who made his comments at the Business of Blockchain event, stated that there were two main reasons for his comments. The first had to do with investor protection, which is necessary with crypto exchanges. However, the second reason had to do with anti-money laundering efforts. Gensler explained:
“Right now, the crypto exchanges are required to register at any state they’re transmitting over some de minimis amount and that means in 50-plus jurisdictions.”
However, everyone had a different opinion on this situation. Caitlin Long, the Wyoming Blockchain Coalition president, has a slightly different opinion. Long stated that the digital assets are considered to be property, and states should have the control, as they already have control over property and commercial law. Long argues that the federal authorities only “control securities law,” which only applies to a select few cryptocurrencies.
When asked about the differences between Coinbase and PayPal (along with other federally regulated companies), Long explained that Coinbase does not handle cash, as opposed to PayPal’s activities. She also took the opportunity to praise the work that Wyoming has done on creating clear regulations in their state.
Peter Van Valkenburgh does not agree. The director of research at Coin Center said that the companies and consumers are completely inconvenienced by the implementation of state-level implementation. As he sees it, there are some states with excessively strict protection, while others are substantially under-protected. He mentioned the situation in Alabama, saying:
“You can get a money transmission license in the state of Alabama […] for a $5,000 bond. So, a company that is handling potentially millions of dollars for Alabamans is secured, the custodial risk is hedged against a $5,000 bond.”
While Gensler brought up the idea that cryptocurrency should be subjected to the ruling of the Bank Secrecy Act, Long does not agree. In fact, she believes that the next challenge will end up eradicating the act, considering the lack of conviction rate it has.
In April this year, the Token Taxonomy Act was introduced by two members of the US House of Representatives. If it passes, then the state regulations presently in effect will no longer take priority.