Last week was a big week for crypto regulation and compliance. In fact, Nic Carter wrote an informed and revealing piece that compares the treatment of the crypto industry by regulators compared to Operation. Here’s our summary on the current state of affairs:
Currently, the regulatory state of the crypto industry is complex, with different countries and jurisdictions taking different approaches to regulation. Some countries, such as Malta and Switzerland, have taken a relatively hands-off approach, while others, such as China and India, have taken a more restrictive approach to regulating the industry.
In the United States, the regulatory landscape is still developing, with a number of federal and state agencies taking different approaches to regulating the industry. The Securities and Exchange Commission (SEC) has taken a relatively strict approach, asserting that many cryptocurrencies should be treated as securities and therefore subject to securities laws.
The Commodity Futures Trading Commission (CFTC) has taken a different approach, asserting that cryptocurrencies are commodities and therefore subject to commodity laws. The Internal Revenue Service (IRS) has also weighed in, issuing guidance that cryptocurrencies should be treated as property for tax purposes.
Overall, the regulatory landscape in the US is complex and still evolving. There is no one-size-fits-all approach to regulating the industry, and different agencies are taking different approaches depending on their jurisdiction and mandate.
One regulatory action that has drawn comparisons to the crypto industry is Operation Chokepoint. Operation Chokepoint was a program initiated by the US Department of Justice (DOJ) in 2013 that targeted industries that were deemed to be high-risk for fraud, such as payday lenders and gun dealers.
Under Operation Chokepoint, the DOJ put pressure on banks to cut off these high-risk industries from their services, including the ability to open bank accounts or process credit card transactions. The goal was to reduce the risk of fraud and money laundering in these industries, but the program was criticized for its lack of transparency and due process.
Some in the crypto industry have drawn comparisons between Operation Chokepoint and current regulatory actions against the industry, such as the SEC's efforts to crack down on fraudulent initial coin offerings (ICOs).
Like Operation Chokepoint, these regulatory actions have put pressure on the banking industry to cut off services to certain actors in the crypto industry, such as ICO issuers. While the goal is to reduce the risk of fraud and protect investors, the lack of transparency and due process has raised concerns among some in the industry.
However, there are some important differences between Operation Chokepoint and current regulatory actions against the crypto industry. First, the goals of the two programs are different. Operation Chokepoint was aimed at reducing the risk of fraud and money laundering, while current regulatory actions against the crypto industry are aimed at protecting investors and ensuring that the industry is operating in compliance with existing laws and regulations.
Second, the legal basis for the two programs is different. Operation Chokepoint was criticized for its lack of legal basis, as it relied on informal pressure from the DOJ rather than formal legal action. In contrast, current regulatory actions against the crypto industry are based on existing laws and regulations, such as securities laws and anti-money laundering laws.
Overall, the current regulatory state of the crypto industry is complex and evolving, with different countries and jurisdictions taking different approaches to regulation. While there are some similarities between current regulatory actions and Operation Chokepoint, there are also some important differences. It's clear that the regulatory landscape in the crypto industry will continue to evolve in the years ahead, and it will be important for industry participants to stay informed and engaged in the regulatory process.