Emily spoke at the Crypto Valley (CV) Summit at Davos in January.
Emily Landis Walker offered her input on regulations and compliance relating to hashtag#digitalassets at the ‘Regulatory Approaches’ panel at the Crypto Valley Association Summit in hashtag#Davos.
Her main points are as follows:
- The US is clearly a desired location for BC/Crypto operators as it is a market with a concentrated, desirable area of opportunity and due process. Projects need to operate within the law of the US in order to succeed.
- Unfortunately, the navigation of the crypto regulatory framework in the US is difficult at best and only for those who are willing to circumnavigate the regulations and comply to access the market. This is time-consuming, complex, and costly, particularly for a start-up.
- The largest obstacle to innovation in the US in the blockchain/crypto space is the lack of coherent and defined ‘legal and regulatory’ framework application to these projects. As the industry matures, the regulators become more educated and the rules become more clear, but no single agency can claim jurisdiction for crypto and agencies have vastly different interpretations of the relevant laws under their remit.
- Over 20 trade associations and lobbyists are claiming to work in this space in Washington alone. They are not united in thought or process and the message is muddled, confusing to the recipients, and largely ineffective in driving unified clarity from the regulators.
- The key features that make the US regulatory market difficult to navigate fall in 3 categories:
- Federal Regulators are many – not one – with conflicting views based on their jurisdiction.
- In addition, they report to different committees in Congress:
- The main agencies -SEC, CFTC, CFPB -are independent (not reporting to a government agency). FINCEN, OFAC, and IRS are part of the US Treasury but the Secretary has no other official power to pull the independent agencies with Treasury departments into congruity.
- Congressional committees who have jurisdiction over these agencies (not including appropriations or oversight, do not have consensus on what they are going to do in the Crypto space and there is no impetus by, significant understanding or seniority in Committees from the Congressmen who sit on the Congressional blockchain caucus, to make it happen. And as you are all aware – it is not a priority.
- The attributes of cryptocurrencies and their usages cross all agencies. Traditional financial instruments do not – the traditional financial regimes normally fit under one agencies’ remit. Hence the problem.
- Conflicting views are fundamental between these agencies: is a token a security, a commodity, an exchange of value??? Does the operator fall within money transmitter laws? And in all cases does the operator comply with AML/KYC and OFAC sanctions regulations.
- States are separate and have their own laws. g. money transmitter and other licenses and one must be compliant per state. A project must be compliant in any state it touches residents.
- There is no national strategy or a location for one (which rarely works anyway) nor is there likely to be one.
What does that mean for you?
- Working in the US does NOT involve where the operation is located, but if your project touches American citizens.