Federal, New York Officials Look for Public Input on Crypto Regulation

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A top White House official said public input is important to help the administration make informed decisions on policies

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Comments from officials of all three agencies, delivered Thursday at a New York conference hosted by blockchain data platform Chainalysis Inc., follow an executive order signed by President Biden in March that directs federal agencies to study digital currencies.

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On Thursday, the US Commerce Department’s International Trade Administration issued a notice asking for public input as it develops a framework for enhancing the US economic competitiveness in and leveraging of digital-asset technologies. The notice asks for the public’s response to 17 questions related to competitiveness, comparisons to traditional financial services and financial inclusion considerations, and technological development, through July 5.

Carole House, the director of cybersecurity and secure digital innovation at the White House’s National Security Council, said that these comment requests “are completely earnest” and that public comment is essential to helping the administration make informed decisions on policies related to the digital-assets industry.

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“So all of these opportunities, with the government…putting out requests for comments, we mean it, we need that data, we need that input,” said Ms. House.

Treasury’s Financial Crimes Enforcement Network received more than 10,000 comments from the cryptocurrency industry and other stakeholders in response to its proposed rulemaking compliance with the so-called travel rule in the cryptocurrency industry, according to Alessio Evangelista, FinCEN’s associate director for enforcement and compliance.

The rules proposed in 2020 would require cryptocurrency trading platforms and banks to keep records of a customer’s cryptocurrency transactions and counterparties—including verification of their identities—for any transactions exceeding $3,000. In addition, banks and trading platforms would have to report any cryptocurrency transactions that involve unhosted wallets and exceed $10,000 to FinCEN within 15 days.

“It is important to us that we hear from you,” Mr. Evangelista said at the conference. “We read every single comment and we are carefully considering them as we move forward. Addressing the illlicit finance and national security risks related to the travel-rule compliance and unhosted wallets remain top of mind for us.”

On the state level, the New York State Department of Financial Services is looking to make its licensing and business registration process for digital assets faster and to issue more guidance for the industry, superintendent Adrienne Harris said.

New York’s financial regulator, which plays an outsize role in financial regulation and enforcement nationwide, has 33 licensed crypto companies so far and is looking to issue guidance on stablecoins, according to Ms. Harris.

NYDFS has added 15 people to its virtual currency unit this year and intends to triple the size of that team by the end of the year, she said. She also welcomes people from the private sector to join her team to help make sure the regulator has a balanced approach.

The agency recently issued another piece of guidance that says cryptocurrency firms should make use of blockchain analytics tools to help prevent and manage financial risks and suspicious activities. Ms. Harris added that the NYDFS itself uses blockchain analytics, prompted by the war in Ukraine.

“I’m a firm believer that we can be good for consumers, good for markets, but also cement New York’s place as the financial capital of the world, [and] be a great place to do business whether you’re in crypto or other areas of financial services,” Ms. Harris said. She added that the NYDFS wants to continue its role as the pre-eminent regulator of virtual currency, especially as the federal government looks for ways to regulate the cryptocurrency industry.

Write to Mengqi Sun at [email protected]

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Credit: www.Businesshala.com /

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