Ripple, Coinbase, Binance and Crypto regulations
The road ahead for cryptocurrency regulation is long and winding. But some common themes emerge from the din of voices calling for executives and guardrails, for the industry as a whole and for holdings like bitcoin and stablecoins.
There is the President’s Task Force on Financial Markets, which brings together a wide range of regulators, including the collective heads of the Treasury Department, the Board of Governors of the Federal Reserve System, the Securities and Exchange Commission (SEC). and the Futures Commodity Commission (CFTC).
And earlier this month, the task force weighed in on the need to regulate at least one subset of crypto: in this case, stablecoins.
As PYMNTS recently reported, regulators noted in their report that âif well designed and properly regulated, stablecoins could support faster, more efficient and more inclusive payment options. Additionally, the transition to a wider use of stablecoins as a form of payment could happen quickly due to network effects or relationships between stablecoins and existing user bases or platforms.
See also: Chairman’s Working Group: Stablecoin Risk Mandates Legislation
But those same regulators have also noted that there needs to be more oversight and that Congress needs to take action – and even as efforts progress here at home, the Treasury will push for international standards related to tackling the issue. money laundering and the fight against financial terrorism.
The risks ahead
The risks are many, according to the group, as stablecoins can bypass traditional mechanisms of market integrity and investor protection – and there can be bank runs if there is a loss of confidence in the coins they have. themselves and the assets that support these parts.
At a high level, and among the document’s recommendations: Stable coin issuers should be federally regulated depository institutions mandated to hold adequate reserves to meet redemption requests. There is at least some authority in place for the Financial Stability Review Board to designate stablecoins as a systemic risk (and thus help curb stablecoin issuance and activity) if necessary.
The call for a large-scale global framework is echoed by a number of industry players. In the last few days alone, we’ve seen proposals for exchanges like Binance – while Ripple, a crypto issuer, has come up with its own ideas on what a regulatory landscape might look like. Binance has issued 10 âfundamental rightsâ within crypto, which pave the way for its own version and vision of a framework.
Also Read: Binance Intros Rights For Crypto Users, Urges Global Boards
The 10 rights, according to a company blog post, say that âregulation of crypto is inevitable. Users have the right to share their voice on how the industry should evolve with whatever blockchain platform they choose. And in addition, the company said, âBinance is working with regulators and policy makers to support a global framework that protects users without limiting growth and innovation.
The 10 rights don’t offer strict guidelines, but speak a bit in general terms – asserting, for example, that “responsible crypto platforms have an obligation to protect users from bad actors and to enforce Know Your Customer (KYC) processes to prevent financial crimes “. Elsewhere, the company said that “crypto users have the right to access exchanges that keep their funds safe, secure with full deposit insurance.”
Ripple, who is in the midst of a legal battle with the SEC over the very existential nature of crypto – particularly, whether it’s a security or a currency – is considering a crypto trading platform for financial institutions (FIs) and weighed on regulations. But Ripple’s approach appears to differ from the aforementioned calls to create new global standards and frameworks.
The company said in its own document this week that existing executives – can protect stakeholders and foster innovation. In this context, the company pointed out, the company referred to the two proposals designed to work in the existing format, while adapting it to allow innovation in crypto and blockchain.
More details: Ripple plans crypto trading platform for FIs in 2022
“The Securities Clarity Act (SCA) proposes a new term -” investment contract asset “- and specifies that these assets are to be considered separate and distinct from any securities offering of which they may have been part.” Separately, “the Digital Commodity Exchange Act (DCEA), which is complementary to the SCA … seeks to create a federal definition of” digital commodity exchanges “and entrusts the CFTC with the power to register and supervise them, in the same way as the requirements of commodity derivatives markets, âthe document states.
Digital currency exchange Coinbase also released its own ideas regarding regulation last month. The company differs from the other recommendations in that it argues that a single, separate regulator (in turn created by Congress) should oversee the burgeoning market.
See also: Coinbase asks Congress to create a crypto-regulator
There is no clear path ahead for the regulation of crypto, although there is certainty that tighter oversight will come.