US Federal Government: Confusing Regulation For Crypto, Full Clearance For Blockchain
With more influential voices in academia and politics speaking out against burdensome federal regulations, is change imminent?
Individual US states seem to be in competition for the title of the most crypto-friendly in the Union – Ohio’s recent announcement of imminent crypto tax payments being the latest example. Meanwhile, federal authorities remain in disarray with regard to how to define, let alone consistently regulate digital assets.
It is not just stakeholders and crypto buffs who bemoan the disorderly state of federal policies: their usual talking points have been recently validated by academics. In an article forthcoming in a Journal of Financial Transformation, University of Arkansas Law School professor Carol Goforth weighed in with an opinion that essentially summarizes what experts have been airing all along. Goforth notes that there are at least four distinct federal regulators that oversee various aspects of digital assets’ issuance and, each with a different interpretation of their nature.
While the Commodity Futures Trading Commission (CFTC) treats crypto as commodities, the Securities and Exchange Commission (SEC) insists they are securities, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) applies currency rules, and the Internal Revenue Service treats digital money as property.
Skeptical of the possibility that these regulatory powers get consolidated anytime soon, Prof. Goforth calls for increased coordination between the agencies in an effort to introduce a more nuanced, rather than ‘monolithic,’ approach to various crypto assets. In other words, her proposed remedy is to treat such assets on a case-by-case basis, contingent upon their functionality and their users’ motivations. But have there been any signs of such change of heart in the US regulators and policymakers as of late?
At least in one instance, yes. On December 11, CFTC issued a public request for input, seeking in-depth comments on multiple aspects of how Ether and the Ethereum Network operate. The document, which will generate feedback to fuel the work of the Commission’s LabCFTC initiative, includes a list of 25 items pertinent to Ethereum’s purpose, functionality, scalability, security, and even the details of the system’s imminent shift to proof-of-stake consensus mechanism.
While the news got the community agitated, it’s not immediately clear what will come out of the regulator’s renewed interest in Ethereum’s fundamentals. Some observers, like MIT Technology Review’s Mike Orcutt,