The crypto sphere was again making headlines last week in the United States, courtesy of two new legislative initiatives. Senator Jack Reed presented a bill seeking to strengthen Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations for decentralized finance (DeFi). The bill is seen as an attempt to level the playing field between DeFi operations and other financial companies, imposing the same requirements on them akin to centralized crypto trading platforms, casinos, and pawn shops. However, crypto lobbying groups, Coin Center and the Blockchain Association, did not react positively. Both criticized the legislation as a cumbersome, unworkable, and even unconstitutional way of regulating DeFi.
Importantly, Kristin Smith, the CEO of the Blockchain Association, also expressed concern. In her view, the new legislation appears to be replicating existing mechanisms while dismissing that federal law enforcement agencies already have the necessary tools and expertise to manage this “relatively small but important issue”.
Parallelly, members from the House Agriculture and House Financial Services Committee have proposed the Financial Innovation and Technology for the 21st Century Act. The bill aims to clarify the Commodities Future Trading Commission’s (CFTC) jurisdiction over digital commodities and the Securities and Exchange Commission’s (SEC) authority. Moreover, it intends to develop a process for digital assets, initially considered securities, to be sold as commodities. A day before the bill’s introduction, representatives French Hill and Dusty Johnson, who are among the bill’s co-sponsors, sent a letter to SEC Chair, Gary Gensler, criticizing the agency’s alleged tactic of “regulation by enforcement” in relation to the crypto industry.
In more related news, several Bitcoin exchange-traded fund (ETF) applications from BlackRock, Fidelity, Invesco Galaxy, VanEck, and WisdomTree have been published in the Federal Register. The Federal Register’s publication moves these applications one step closer in the SEC approval process.
And lastly, Kuwait has clamped down heavily on all crypto operations, with a move to ban virtually all activities involving cryptocurrencies. The Capital Markets Authority (CMA) has confirmed an “absolute prohibition” on significant use cases and operations with cryptocurrencies, which covers areas including payments, investments, and mining.
These evolving narratives reinforce the need for an ongoing dialogue and clearer regulations for decentralized finance. It is establishing a way forward for crypto, which while not devoid of potential pitfalls or opposition, is steadfast in its journey towards broader acceptance and mainstream adoption. How these multiple facets of proposed regulations and legal actions play out could crucially shape DeFi’s trajectory in the coming years.
Source: Cointelegraph
