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The United States Securities and Exchange Commission (SEC) has a long-standing reputation as one of the strictest law enforcement agencies on issues related to the crypto-asset market. In May, the SEC nearly doubled the size of its Cryptoassets and Cyber Unit, with 20 additional employees on the team.
On September 9, the agency announced its plans to add the Office of Crypto Assets and the Office of Industry Applications and Services to the Corporate Finance Division’s Disclosure Review Program (DRP). The newly formed Office of Crypto Assets will take over the work of the DRP to oversee the review process for applications involving crypto. The new offices will probably be formalized sometime this fall.
In a press release issued by the agency, Director of Corporate Finance Renee Jones stated, “As a result of recent growth in the cryptoasset and life sciences industry, we saw a need to provide greater and more specialized support at DRP. Office of Finance and its Office of Natural Sciences. The creation of these new offices will allow DRP to enhance its focus in the areas of crypto assets, financial institutions, life sciences and industrial applications and services and will facilitate our ability to fulfill our mission.”
A press release explains the restructuring decision, noting that: “Allocation of companies and filings to a single office will allow the DRP to better focus its resources and expertise on addressing unique and evolving cryptoasset review issues.”
Many critics of the SEC’s “regulation by enforcement” approach to cryptocurrency oversight are calling for more market authority to be transferred to the Commodity and Futures Trading Commission (CFTC). Last week, Senators Stabenow (D – MI) and Boozman (R – AK) introduced bipartisan legislation that would achieve such a goal if passed.
The Digital Consumer Protection Act seeks to codify Bitcoin and Ether—the two largest cryptoassets by market capitalization—as commodities and under CFTC oversight. Exchanges would then report and register with the CFTC instead of the SEC. The legislation recognizes that many cryptoassets function as securities – such as initial coin offerings (ICOs) – and should accordingly remain under the jurisdiction of the SEC.
Senator Boozman of Arkansas, in a joint statement on Senator Stabenou’s website about the newly introduced Senate bill, states: “Digital assets and blockchain technology have already, and will continue to, change the way global markets operate. However, this fast-growing industry is currently largely governed by a plethora of state-level regulations.
It is simply not an effective way to protect consumers from fraud. Moreover, relying solely on government regulation does not ensure that rules and regulations work for all stakeholders. Our legislation will give the CFTC exclusive jurisdiction over the digital commodity spot market, leading to more consumer protections, market integrity and innovation in the digital commodity space.”
The White House released a report on cryptocurrency mining
This week, the White House released its long-awaited report on the “Climate and Energy Implications of Crypto Assets in the United States.” Reducing the climate crisis has been a long-standing goal of the Biden-Harris administration. The report reveals that crypto-asset activity in the United States produces similar environmental output to the diesel fuel used in US railroads.
The report further states: “In addition to purchased electricity from the grid, cryptoasset mining operations also cause local noise and water impacts from the operations, electronic waste, air and other pollution from any direct use of electricity from fossil sources, and additional air, water and waste impacts related to all electricity use in the grid.
These local impacts can exacerbate environmental justice issues for underserved communities.” Critics of the environmental impact of cryptocurrencies often focus their objections on the more energy-intensive method of blockchain validation, known as proof-of-work (PoW), used in bitcoin mining.
Despite its findings that the industry requires large-scale energy production, the report goes on to explain, “Broader adoption of cryptoassets and the potential introduction of new types of digital assets require action by the federal government to encourage and ensure responsible development. This includes minimizing the impact on local communities, dramatically reducing energy intensity and supplying clean electricity. Digital asset research that highlights innovation in next-generation technologies can advance America’s security, privacy, equity, resilience, and climate goals.”
This is a direct and clear call to action for crypto enthusiasts and stakeholders to make significant efforts to reduce energy consumption to become more sustainable for the longevity of the industry.
The need for a greener crypto industry has been further highlighted by New York’s recent two-year moratorium on any new PoW crypto mining operations in the state – a move that has worried many strong proponents of Bitcoin mining and PoW practices.
Despite crypto mining being a highly mobile industry – with many miners moving to mining-friendly states like Texas – if more states or Congress pass laws similar to New York’s moratorium, it will inevitably bring mining operations outside of the United States to countries like Brazil , which offered tax breaks for cryptocurrency miners. Even so, the White House report offers a sober but optimistic view of the future of cryptocurrencies in the US, as long as more research and efforts are made to reduce the overall environmental impact.
Uruguay’s executive presented a new law on cryptocurrencies to parliament
Uruguay’s executive branch has presented a bill to the country’s parliament regarding cryptocurrencies in the country. The bill seeks to further clarify how crypto-asset activities will be regulated and which agencies will oversee those activities. If passed, the law would change the organic charter of the Central Bank of Uruguay and introduce the Superintendence of Financial Services as the primary supervisor of the crypto industry and virtual asset service providers. The bill defines virtual property service providers as any entity “that regularly and professionally provides one or more virtual property services to third parties” in the country.
Financial services, law enforcement regulations
