Jay Clayton, who stepped down as chairman of the US Securities and Exchange Commission (SEC) in December, says new regulations may be coming to the Bitcoin ecosystem.
Bitcoin (BTC), cryptocurrency The largest and most important cryptocurrency in the industry by market capitalization, was declared a non-security in the United States, so until now, the country's regulators, such as the Securities and Exchange Commission (SEC), do not have jurisdiction to regulate this digital asset.
However, former SEC Chairman, Jay Clayton, stated during an interview on CNBC's Squawk Box that cryptocurrency could be subject to US regulation in the future, since the fact that it is not considered a security in the country does not completely exonerate it from falling under the application of new regulations that are implemented to regulate the financial and investment sector.
Clayton said he believes it is prudent for regulation to come soon to this digital asset, since, in his opinion, the future of the cryptocurrency depends on it.
Clayton's comments sparked quite a bit of controversy in the crypto community. For many who understand the importance of Bitcoin in society, Clayton did little to promote the development of technology and innovation in his years as SEC chairman, so he has no moral authority to comment on the matter. The former SEC chairman now serves as legal counsel for One River Asset Management, one of the world's largest hedge funds that already has a significant investment in Bitcoin and Ethereum, worth around $600 million and which it hopes to expand to more than $1.000 billion.
It may interest you: One River, the youngest player in the institutional bet on Bitcoin
SEC and the Ripple and LBRY case
The SEC under Clayton filed a demand against Ripple, the company responsible for issuing the token XRP, considered a security by the regulator. According to the agency in late December, XRP is a centrally issued token, so Ripple had to register with the SEC before marketing its product to US investors and customers. Two senior Ripple executives are also the subject of investigations and scrutiny by the regulator.
More recently, the SEC also demanded decentralized content platform LBRY for more than $11 million. In its opinion, LBRY violated US securities regulations by, like Ripple, carrying out the unauthorized sale of its tokens in the country.
The SEC's actions are seen by many experts as overreaching, arguing that the regulator is overstepping its authority and creating an aggressive and disastrous precedent for companies in the industry.
While both cases are still in full swing, before Jay Clayton arrived at the SEC, the regulator pronounced that neither Bitcoin nor Ethereum were securities. Later, in 2019, the SEC reaffirmed these statements, recalling that the two largest cryptocurrencies on the market are not considered securities in the United States.
FATF targets withdrawals to personal addresses
El offend’s most emblematic landmarks, the Financial Action Task ForceIs looking towards Bitcoin, the DeFi and the tokens NFT since last week. The objective of the entity is to establish new policies and regulations that prevent the use of digital assets in illegal activities, such as money laundering. Therefore, in its opinion, it is necessary to regulate Bitcoin transactions.
The organization is presenting a proposal which seeks to prohibit bitcoin transactions to addresses controlled by the users themselves; that is, to addresses of Wallets or personal wallets.
Although it is only a proposal, the FATF draft goes against the very nature of Bitcoin, which was born as an alternative and decentralized financial system, capable of giving users the freedom to manage their own funds, without depending on intermediaries or trusted third parties.
The FATF proposal states that financial transactions and bitcoin withdrawals should be carried out only through addresses controlled by exchanges, the world's crypto exchanges controlled by third parties; while transactions from self-hosted wallets should be banned to minimize money laundering risks.
A reality with the fiat that few ignore
However, it is worth remembering that centralization is not a guarantee of transparency and legitimacy, since many commercial banks in the current traditional financial system
have been involved in major cases of money laundering and money laundering. As they pointed out Glenn Hutchins, co-founder of the multinational investment firm Silver Lake, and Alicia Pertusa, head of BBVA's Client Solutions strategy area, a large percentage of the fiat money in circulation, especially US dollars, is used in financial crimes and other illicit activities on a daily basis. While data from renowned blockchain forensic research firm, Chainalysis, show that currently, not even 0,2% of all BTC in circulation has been used to commit any illegal act or crime.
These data, compared to those of 2019 or previous years, show a fairly significant reduction in the percentage of BTC that criminals used to commit their crimes. This significant reduction is directly related to the transparency and immutability that Bitcoin offers as an alternative financial system. In this network and system, all transactions carried out are recorded in its blockchain forever; and can be verified at any time, by anyone who wishes to do so.
Bitcoin: A highly transparent and trustworthy system
Chainalysis published a letter where it refers to this level of transparency of Bitcoin so that regulators can investigate and track suspicious transactions without the need to centralize operations. The letter from the research company came as a response to the proposal of the Treasury Department and FinCEN to establish new KYC rules and requirements on cryptocurrency transactions made to or from self-custody wallets.
Chainalysis highlighted the risks of centralizing financial information, noting that this will only increase hacks, and put the security of users and investors and their funds at risk.
Meanwhile, the United States is preparing for the development of a digital dollar. The creation of a CBDC for the country's national currency was recently confirmed by the Federal Reserve (FED), which reported that by the end of the year the entity will already have the code and a prototype of the digital dollar to submit to public evaluation.
Continue reading: US regulation will increase hack risks, says Chainalysis
