Why U.S. Treasury asked for public comments on crypto regulation

The U.S. Department of Treasury has asked the public to submit comments on digital assets, including cryptocurrencies. The Treasury has invited comments on the illicit uses of crypto and the proposed action plan in particular. The notice follows the Executive Order on 9 March 2022.

Well, the Treasury has asked people to suggest additional steps the authorities can execute to address illicit uses of cryptocurrency and decentralized finance and coordinate its Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) policy. 

Stronger cypto regulation

The Treasury further added,

“Illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, public-private engagement, oversight, and law enforcement.” 

The Executive Order named “Ensuring Responsible Development of Digital Assets” was issued on 9 March by US President Joe Biden.

It outlined the objectives of the government in regard to the regulation of digital assets. These objectives include (i) consumer and business protection, (ii) safeguarding financial stability, (iii) mitigating illicit activities, (iv) reinforcing American financial leadership, (v) promoting safe and affordable financial services, and (vi) supporting technologies for digital assets’ development.

Following this March order, the White House recently released its first-ever comprehensive framework for the responsible development of digital assets on 16 September.

It encourages regulatory bodies such as the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to aggressively investigate and enforce action against cryptocurrency-related unlawful practices.

Industry criticism

That being said, the leading members of the industry criticized the approach of the government towards cryptocurrency and other digital assets.

The Blockchain Association tweeted that the order of the administration is a missed opportunity to cement American leadership in the cryptocurrency industry. It said that the reports focus more on the risks posed by crypto instead of its benefits.  

The Crypto Council for Innovation tweeted that the order follows an outdated and unbalanced understanding of the technology. “Regulation by enforcement is not regulatory clarity,” it added.

It was after such widespread criticism that the Treasury decided to invite public comments on its approach.

The public can submit the comments until 3 November 2022.