- As Forbes headlines, a “crackdown”, a major blow against Bitcoin, could be imminent in the USA due to new regulations.
- Although it is not yet possible to estimate what the new regulations will look like, similar laws as in Europe seem likely.
Is there a threat of a Bitcoin and crypto crackdown in the US? According to Forbes magazine, there is a “blow against Bitcoin as a ‘significant’ crypto campaign in the USA”. In support of this statement, the online version of Forbes states that during a hearing of the Finance Committee, US Treasury Secretary Steve Mnuchin reiterated the urgency of stricter regulations for cryptocurrencies.
Mnukhin said that the treasury branch of FinCEN (Financial Crimes Enforcement Network) will soon introduce “significant new requirements” for cryptocurrencies and related service providers. He explained that FinCEN is currently spending a lot of time working on the regulations:
We want to make sure that technology moves forward but, on the other hand, we want to make sure that cryptocurrencies aren’t used for the equivalent of old Swiss secret number bank accounts.
The statement has to be seen in the context of the new White House budget proposal for the year 2021, which envisages that the US Secret Service will be returned to the jurisdiction of the Treasury Department in order to increase efficiency in the investigation of criminal financial activities. The proposal refers to cryptocurrencies twice, but on both occasions in connection with the financing of terrorism, money laundering or other crimes:
Technological advancements in recent decades, such as cryptocurrencies […] have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes and the financing of terrorists. […] The Budget proposes legislation to return the U.S. Secret Service to Treasury to create new efficiencies in the investigation of these crimes
Also last week, the president of the Federal Reserve of Minneapolis, Neel Kashkari, described cryptocurrencies as “a giant garbage dumpster”. Kashkari said the reason for the value of the US dollar is because the US government has a legal monopoly on production.
Cause for panic?
The US government’s stance is by no means new and reflects a long-standing sentiment towards cryptocurrencies. Last year, a tweet from US President Trump caused a stir by declaring that he was not a “fan of Bitcoin and other cryptocurrencies”.
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Mnukhin, a Trump confidant, echoed Trump’s statement, warning that cryptocurrencies pose a “risk to the financial system” and a “national security issue” when used like a Swiss bank account.
Although it is currently impossible to estimate what impact the new regulations will have, it is still too early to say. However, as previous statements suggest, there is unlikely to be a “crackdown”. Rather, it seems more likely that it will be a question of stricter regulations being imposed in particular on providers of cryptocurrencies, such as exchanges.
In this respect, Europe could be a role model for the USA, which has already provided for a stricter legal situation with the fifth money laundering directive. The directive has already been implemented in Germany. Since January 1, providers of cryptocurrencies are considered to be legally obligated within the framework of the Money Laundering Act, which is why all providers of custodian services for cryptocurrencies must apply for a license from the Federal Financial Supervisory Authority (BaFin).
It remains to be seen whether the USA will take Europe as a role model. CNF will report if there is any news.