The embrace of diversity is one of the qualities that define a human race, almost everything has a stint of an embrace of diversity in it and the cryptocurrency ecosystem itself is filled with numerous diverse cryptocurrencies and projects with different fundamentals. Bringing diversity into the cryptocurrency ecosystem has many facets and an exploration of regulations remarkably changes the narrative, especially with the United States of America under focus.
While the United States government is a democratic government for records, it gives its regulatory agencies to take up independent oversight of the general U.S. stock markets and the investment terrain. Although each agency has a specific job or activity description, the lack of a unifying framework for governing emerging markets such as the cryptocurrency ecosystem has made many of these agencies to pursue contradicting regulations in what appears to project some agencies as bulls and others as bears in the crypto space.
There are several agencies in the U.S., but those with direct influence in the cryptocurrency ecosystem are limited to the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency (OCC), the Commodities Futures Trading Commission (CFTC), and the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
In the past year, each of these agencies has rolled out policies or regulations which can either earn them the tag of a bear or bull in the crypto space. Although this classification is dynamic as some of these agencies have a split in their respective interactions with the crypto space.
The SEC has one of the most exerting influences in the cryptocurrency ecosystem and the entire U.S. markets as a whole. While the year was filled with notable clampdown of fraudulent cryptocurrency projects, the SEC received the tag of a bear to the crypto space due to the last move of former Chair Jay Clayton in which the agency filed a $1.3 billion lawsuit against Ripple and two of the firm’s executives for allegedly conducting the sale and distribution of XRP, which is tagged as an unregistered security.
This lawsuit has sparked outrage in the space particularly amongst XRP investors who believed the SEC has not acted fairly, causing billions of losses to innocent investors. The legal battle between Ripple and the SEC is set to begin officially in February but a Federal Court in Rhode Island may grant some XRP investor petitioners a Writ of Mandamus before the date.
The OCC has made some significant moves in recent times that have endeared the agency as well as its boss Brian Brooks to the cryptocurrency ecosystem in general. The agency has been remarkably backing cryptocurrency and stablecoin innovations first by allowing banks to keep custody of digital assets for their customers while also recently permitting banks to make use of public blockchain networks, as reported by Cryptoknowmics. The OCC is one of the bullish U.S. agencies based on their regulatory oversight to date.
The CFTC is also a supporter of cryptocurrency innovations through the issuance of guidelines billed to promote innovations in the space.
The FinCEN, however, has come under the toughest of scrutinies and backlash with its proposed crypto regulations to subject the reporting of cryptocurrency transactions emanating from exchanges and unhosted wallets respectively.
The proposed rules have been met with very strong resistance from the crypto community, particularly with the limited timeframe given to submit feedback on the proposed rules. The FinCEN’s proposed rules will be a clampdown on crypto trading activities as some of the exchanges reportedly lacks the technical capability to successfully adhere to the new reporting standards under the given timelines.
While the cryptocurrency system is still young and emerging, the growth of the space particularly in the U.S. will be accelerated if there are unifying and comprehensive guidelines admissible across the board, just as are other countries according to Ripple CEO, Brad Garlinghouse.
A new administration is all set to be ushered in a few days and if anything should change, it will be the choosing of sides by these agencies as either bears or bulls with their general policies. Although the crypto space will applaud if the administration chooses bulls.