The push to regulate digital assets and those operating in the industry has support on both sides of the political aisle in the United States, The Senate Republican Policy Committee, the policy research arm of the Republicans in the Senate, released a policy paper on digital assets last week, recognizing the explosion of ‘cryptocurrency’ in the mainstream and calling for regulatory clarity for consumers, entrepreneurs and investors.
The paper is framed by the journey of digital assets from ‘an obscure fad’ to a ‘much more mainstream form of investment and finance,’ comparing the market capitalization of all digital assets in 2017 (US$19 billion) to 2022 (US$2.2 trillion). It also points to recent steps taken by the federal government to adopt a more deliberate approach to the development of the industry, including President Joe Biden’s executive order from March directing federal agencies to assess and report on the risks and benefits posed by digital assets.
The publication does not express any new opinions on digital assets, instead amounting to a retelling of the most commonly-stated benefits and risks in the area, quoting previous statements by U.S. officials and representatives. For example, it reads that “some proponents make the case that cryptocurrencies could be useful in areas or countries where people have less trust in their government or institutions.” Further down, it notes that “some observers compare cryptocurrency’s current state to the early days of the internet, emphasizing that we have not seen the full scope of how it can be applied. They say it is crucial to allow the industry to innovate.”
On the other hand, it quotes well-publicized research from blockchain analytics company Chainalysis that “cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses receiving $14 billion over the course of the year, up from $7.8 billion in 2020.”
In that context, the paper looks at a small selection of responses from governments around the world in curbing crime associated with digital assets. This includes the efforts of the FBI and U.S. Department of Justice (DoJ) to track and retrieve ransomware payments made via digital assets, such as the DoJ’s successful recovery of 63.7 BTC ransomed from Colonial Pipleline following a cyberattack.
Brief words are also given to the decision of some countries, such as China, to take a much harder line on digital assets than others have, as well as the much-discussed environmental impact of certain digital assets.
Though the release doesn’t contain any action points or even betray the GOP’s specific thinking on digital asset regulation, the additional focus is in step with actions of other US policymakers and officials who are expressing a commitment to taking steps to address the opportunities and concerns brought about by an exponentially-growing industry.
“Because cryptocurrencies are similar to but distinct from many other types of financial assets such as currencies, securities, and commodities, we are likely to see several proposals on appropriate regulatory frameworks,” the release concludes.
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