Author | Coin Center
Translation | GaryMa Wu Says Blockchain
Original link:
https://www.coincenter.org/coin-centers-analysis-of-the-crypto-policy-landscape-following-the-elections/
In the recent elections, cryptocurrency received a lot of attention, and many are speculating about whether the new government and Congress will have a friendly stance towards cryptocurrency. In short, we expect that in some areas, policies may improve, while other areas will still face challenges. We believe that in the realms of securities and banking regulation, there is potential for clearer rules, such as those governing centralized secondary markets and centralized stablecoin issuers.
The prospects regarding anti-money laundering, tax reporting, and sanctions are less clear. Below are our thoughts on these issues and a preliminary analysis of future opportunities and challenges.
How to view cryptocurrency-related issues during a government transition
Cryptocurrency policy issues can broadly be divided into two categories: regulatory issues (tax reporting, BSA/AML, sanctions) and investor protection issues (SEC, CFTC, banking). Achieving good policy in one category does not mean similar results can be achieved in the other. The underlying motivations for these two categories of policy differ (protecting investors vs. identifying and stopping illegal flows of funds), and the political motivations and opportunities for coalition building vary across each area.
Similarly, the cryptocurrency ecosystem can also be divided into two main categories: centralized businesses (custodial wallet providers, centralized exchanges, trusted issuers) and developers and users of decentralized infrastructure (protocol developers, non-custodial wallet and application developers, and non-intermediated users of these protocols and applications).
Coin Center hopes to promote good policy across all dimensions, but our core mission is to defend the rights of developers and users of decentralized and peer-to-peer tools. In the areas of investor protection or regulation, any overly aggressive regulatory regime could threaten developers and users. However, threats from the regulatory realm have seemed more far-reaching in recent years.
Below is a chart of past and potential future policy actions to help you understand this framework:
You may notice that the box in the lower right corner appears particularly heavy compared to other sections. This may reflect our focal point. Coin Center's mission focuses on the code publishing rights of developers of decentralized infrastructure (involving the First Amendment) and opposing unreasonable regulatory requirements (involving the Fourth Amendment). This box is at the intersection of these two major issues. Even with some bias, this area has indeed been more controversial over the past four years than any other. There are various explanations for this, such as that from a public perspective and news cycle standpoint, some politicians mistakenly or opportunistically link the tragedies of global and foreign policy with cryptocurrency (such as fundraising for Hamas, Russian oligarchs attempting to evade sanctions). Additionally, in political coalition building, the left and right, while rarely in agreement, sometimes find common ground on national security and regulatory issues.
What are the biggest threats?
In recent years, the freedoms of individual cryptocurrency users and developers have faced serious threats. We have seen the SEC increasingly overreaching its enforcement, with the rule revisions defined by exchanges gradually involving individual developers and users directly, as well as enforcement actions against wallet providers like ConsenSys's Metamask and Coinbase Wallet. At the same time, regulatory issues have become increasingly prominent, including the 6050I reporting obligation, Tornado Cash sanctions, broker reporting obligations, and unauthorized fund transfer lawsuits against non-custodial developers. Meanwhile, in Congress, we have been opposing legislation such as CANSEE and DAMLA, which attempt to impose unreasonable regulatory obligations on non-custodial developers.
Still Tough Nuts to Crack
There are three major threats that require special attention: (1) 6050I, (2) Tornado Cash sanctions, and (3) unauthorized fund transfer lawsuits. First, in the context of 6050I, we already have ongoing litigation, as we believe the IRS's requirement to forcibly report the personal information of recipients of cryptocurrency exceeding $10,000 violates constitutional provisions against warrantless disclosures. Second, regarding the Tornado Cash sanctions, we also have ongoing litigation, arguing that the sanctions law does not grant the Treasury the power to prohibit Americans from using immutable smart contracts (neither foreign nationals nor their property). Third, we are shocked by the unauthorized fund transfer lawsuit brought by the Southern District Court of New York against developers of non-custodial software tools (such as Tornado Cash and Samurai Wallet) and will support the defendants in these cases as much as possible. While the Department of Justice may change under the Trump administration, it may not abandon these prosecutions due to its political independence.
Reasons for Optimism
While not delving deeply, it seems credible that the new government will be friendlier towards centralized businesses in the U.S., especially on issues related to investor protection. This is good news, as intermediation services and efficient capital formation are crucial for expanding the appeal of cryptocurrency, particularly for audiences that are less technologically savvy. However, how does Coin Center's core concern, which focuses on the impact on developers and users of truly decentralized tools and services, fit into this?
From an institutional level, President Trump's general support for cryptocurrency and his choices for SEC and Treasury appointments may mean that some controversial rule-making will be frozen or even discarded. This is a consistently positive signal for us, as the SEC's redefined rules for exchanges and the IRS's broker rules for non-custodial developers have always hung like swords over our heads.
The new government's willingness to roll back excessively aggressive sanctions and anti-money laundering policies remains uncertain. Nevertheless, we still hope that if it gradually becomes clear that even under a friendlier SEC, stringent regulatory policies will drive innovators out of the United States, hinder development, and deprive ordinary Americans of the benefits of these technologies, some progress might be made. The actual effectiveness of these policies in stopping criminals and terrorists is negligible.
We are also optimistic about Congress possibly playing a larger role in advancing these regulatory issues. A lot of work has been done, including critical letters sent by members regarding the implementation of 6050I, Tornado Cash sanctions, and unauthorized fund transfer lawsuits. Legislation like the (Blockchain Regulatory Certainty Act) will provide a legislative solution to unauthorized fund transfer lawsuits, and we are also prepared to find bipartisan pathways for its passage.
We look forward to collaborating with the new government on this issue and cautiously believe that if our arguments are persuasive enough, they will receive fair consideration. Throughout history, the constitutional rights of the United States, especially the respect for free speech and vigilance against unreasonable searches and seizures, should ensure that this is the best place to build and use cryptocurrency and open blockchain networks. It is important to clarify that 'supporting cryptocurrency' does not only mean choosing friendlier institutional leaders or implementing more business-friendly regulations, but also involves something deeply rooted in American culture: defending privacy and free speech during the toughest times when national security threats, crime, and terrorism momentarily overshadow our enduring pursuit of freedom, privacy, and openness. Now is the time to act, to strive for strong legal precedents to protect these technologies and engrave the benefits they may bring into the nation's future.