Actions by US government foreshadow potential cryptocurrency regulations
In the early days of the Trump administration, there was a flurry of activity that hinted at potential upcoming crypto regulations. It seemed that the industry might not be regulated as securities.
However, there has been criticism from practitioners who feel there hasn’t been any concrete change in the form of new rules or guidance. The formation of the crypto task force, President Donald Trump’s crypto executive order, crypto czar David Sacks’ lone press conference, and the digital asset reserve have been viewed as mere theater.
The real work of regulation happens through guidance, enforcement, and rulemaking, which lays the foundation for rules-based systems.
Trump’s Approach to Banking and Crypto
During the Biden administration, there was controversy around a policy known as “Operation Chokepoint 2.0” that affected certain crypto media channels. This highlighted issues around access to banking services for cryptocurrency companies.
One of the first steps taken by the Trump administration to address this was to repeal certain directives that had made it difficult for banks to hold cryptocurrencies, thereby fixing the industry’s debanking problem.
Various agencies, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, released interpretive guidance and rescinded previous rules, allowing banks to engage in crypto-related activities more freely.
These changes could potentially have a significant impact on cryptocurrency access to banking services in the long term.
Dismissed Crypto Cases
The SEC dropped virtually every pending matter involving a cryptocurrency defendant. While this may benefit the targets, it doesn’t establish precedent for future enforcement. Nevertheless, it indicates that certain activities may not be pursued for enforcement in the near future.
There are cases where the SEC filed complaints regarding the sale and offer of unregistered securities. Most of these cases have been dismissed or settled without admissions of wrongdoing, indicating a shift in how the SEC views token-generating activities.
It remains to be seen how these changes will affect the crypto industry’s access to banking services in the future.
Stayed Pending Resolution
Some cases have been halted through joint motions to pause the suits, suggesting a potential subsequent dismissal. These cases involve allegations of unregistered operation as well as fraud. The government’s approach in these cases may signal a willingness to find a resolution.
SEC Investigations into Crypto Firms
Investigations around NFTs’ status as securities or intermediaries operating as unregistered brokers have been reportedly ceased by the SEC after Trump’s inauguration. The consistency in dropped charges and investigations reflects the SEC’s stance on crypto activities within securities laws.
Implications of the Dismissals
While the dismissals don’t explicitly legalize certain crypto activities, they do indicate how the SEC views cryptocurrency within securities regimes. Charges around operating as a broker, issuer of securities, and fraud have been dropped, suggesting that these activities may not be considered as securities.
The SEC’s position on traditional memecoins, proof-of-work mining, and stablecoins denominated in dollars further reinforces this view that certain crypto activities fall outside traditional securities laws.
Overall, the dismissals, pauses, and dropped investigations signal a significant shift in the SEC’s approach to cryptocurrency regulation.
Conclusion
The recent flurry of policy changes and dismissals under the Trump administration may represent a significant shift in crypto policy within the US government. Banks now have more freedom to engage in crypto-related activities, and companies previously under scrutiny are now free from litigation.
This improved regulatory environment provides legal clarity for industry participants to conduct business involving cryptocurrency. With ongoing guidance and potential regulatory changes on the horizon, the future looks promising for the crypto industry in the United States.
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