US Treasury plans to ask public if crypto-related regulations ‘no longer fit for purpose’

The U.S. Treasury Department will solicit comments from the public on digital assets, including their views on how regulations could address illegal use of crypto.

In a document to be published in the Federal Register on Tuesday, the US Treasury Department requested public comment on “digital asset-related illicit financial and national security risks as well as the publicly released action plan to mitigate the risks” related to President Joe Biden’s March executive order on crypto . The department invited the public to share their thoughts on which regulatory obligations the US government had imposed that were “no longer fit for purpose in relation to digital assets”, as well as to provide suggestions for alternative regulations that address illicit financial risks and vulnerabilities.

“Illegal activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may affect such activities, and exploration of opportunities to reduce these risks through regulation, oversight, public-private engagement, oversight and law enforcement,” Treasury said .

Specifically, the U.S. Treasury Department asked for potential additional steps it can take to address ransomware attacks, illicit financial risks of cryptocurrency mixers and DeFi, and how the government can coordinate anti-money laundering and combating the financing of terrorism policies at both the state and federal level level. The public has until 3 November to make comments.

The request for public comment followed the White House’s release of a regulatory framework for digital assets on September 16. Many in the area, including crypto advocacy groups, criticized the administration for seemingly focusing on the illegal use of crypto rather than its potential benefits. As part of the framework’s requirements, the Ministry of Finance will prepare an “illegal financial risk assessment of decentralized finance” by February 2023.

The right regulations will drive technological innovation and preserve crypto’s core value proposition of freedom and empowerment, while ensuring the right guardrails are in place for consumer protection and choice. (2/9)

— CZ Binance (@cz_binance) 16 September 2022

Related: Illegal crypto use as a percentage of total use has fallen: Report

Biden’s executive order also prompted the Treasury Department and the Federal Reserve to explore policy goals and for a U.S. central bank’s digital currency. On September 17, the Office of Science and Technology Policy released a report on 18 different design choices for the potential implementation of a digital dollar in the United States.