Cryptocurrency advocates are sounding the alarm over two separate policy changes underway in Washington that they say could give federal regulators the power to ban financial institutions from engaging in crypto transactions -currency and otherwise hamper crypto developers with “radical” new regulations, according to industry watchers.
The first is a new rule proposal introduced by the Securities and Exchange Commission on Wednesday aimed at increasing oversight of communication platforms that facilitate off-exchange securities transactions, typically used in the bond and certain derivatives markets.
Gabriel Shapiro, a crypto lawyer at law firm BSV, wrote in a Thursday newsletter that this new proposal could easily be used to expand the definition of securities exchanges to include market makers. automated, a type of decentralized protocol that matches buyers and sellers. of crypto-currencies without an intermediary exchange or broker.
Read more: SEC’s Gensler won’t say if ether is a security, amid crypto market plunge
“We should not underestimate the threat this radical and sudden paradigm shift by the SEC poses to blockchain and decentralized financial movements,” Shapiro wrote. “We’ve had a paltry 30 days to make our voices heard – the SEC must revise this proposal to clarify that it is not intended to… prohibit the creation and deployment of simple code for peer-to-peer token trading -peer or websites. ”
The SEC has provided an unusually short 30-day period for comment, though that period will likely be a few weeks longer due to a backlog of proposed regulations making their way through the Federal Register. The 30-day comment period does not begin until the regulatory proposals have been placed in the Federal Register, although interested parties may submit their comments to the SEC before that date. Comment periods are generally 45 or 90 days.
The SEC’s only Republican commissioner, Hester Peirce, strenuously opposed the proposed rule at the committee’s meeting on Wednesday, particularly objecting to the short window for public comment.
During an appearance at the Finance on the Blockchain conference on Thursday, Peirce echoed Shapiro’s concerns that the new rule could impact crypto trading, despite its stated purpose.
“I think it’s really important for people in the crypto space who operate or are planning to build any type of trading platform…to take a look at this release, because it’s really intimidating,” a- she declared. “Please take a look at it thinking about how it might apply, and please consider helping us think through these issues by writing a feedback letter.”
The prices of major cryptocurrencies like bitcoin BTCUSD,
and ether ETHUSD,
were up on Friday, but both remain down more than 20% on the year, according to Dow Jones Market Data.
See also: Former CFTC Chairman Calls Biden’s Approach to Crypto Regulation ‘Reactionary’
The SEC’s proposed rule came just days after a fresh scare for crypto advocates following the release of the text of the America COMPETES Act of 2022, aimed at boosting state semiconductor production. United States and other research and development. The bill is being sold as a measure to help US industry compete technologically with China, but it included provisions that would increase the power of the Treasury Department to fight money laundering.
The bill “would give the Secretary of the Treasury unfettered discretion to prohibit financial institutions (including cryptocurrency exchanges) from offering their customers access to cryptocurrency networks,” according to an article. blog post published Wednesday by Jerry Brito, executive director of cryptocurrency advocacy group Coin Center.
“This amendment provides the Secretary with a completely unchecked power to prohibit or secretly condition any transaction in any domestic financial institution,” he added. “It’s a dangerously high-handed approach to solving money laundering issues.”
Crypto industry lobbyists, however, seem confident they can get the text changed to allay some of their concerns, contrary to their failed attempt to remove new crypto tax reporting requirements from the deal. bipartisan infrastructure of the past year.
“This is not another infrastructure situation,” writes Kristin Smith, executive director of the Blockchain Association, a crypto industry group on Twitter. “We have a constructive dialogue with decision makers who are open to feedback.”