By James Davis
Over the past two weeks, US regulators have escalated their efforts to scrutinize crypto players. Popular crypto firms have found themselves in the crosshairs of the authorities. Blockchain Association boss Kristin Smith says these regulatory crackdowns in the crypto industry are not the right approach.
The Blockchain Association is a group comprising nearly 95 members that aims to improve the public policy environment for the blockchain industry. Several crypto firms fund it, including the exchange Kraken, Filecoin Foundation, and Digital Currency Group.
The SEC Crackdowns
The Securities and Exchange Commission (SEC) slapped exchange Kraken with a $30 million penalty fee last week for failing to register its staking service with the regulator. In addition, the Commission directed the exchange not to offer the service to its American clients.
In January, the regulator filed a lawsuit against exchange Gemini and crypto lender Genesis for offering the ‘Gemini Earn’ as an unregistered security. At the time, the Commission chairman Gary Gensler said the charges should serve as a warning to all non-compliant companies.
Three days ago, news broke that the Commission was also planning to file a lawsuit against BUSD issuer Paxos for alleged violation of investor protection policies.
Smith is opposed to these enforcement actions. Instead, she is advocating for the adoption of Europe’s approach, which provides a comprehensive regulatory framework that assigns various regulators the relevant duties to manage the risks attached to the crypto industry.
The European Union’s Markets in Crypto Assets (MiCA) regulation will take effect early next year and seeks to clarify several crypto regulations. Part of the MiCA regulation requires stablecoins issuers to hold adequate reserve funds to prevent collapses like that of Terra’s UST.
Blockchain Association Boss Calls Out Lawmakers
Smith took aim at Senator Elizabeth Warren, who recently criticized the crypto players for not applying money laundering policies adequately. The CEO says such rules can apply to centralized crypto exchanges, but it’s impossible to adopt a Know-Your-Customer program for self-custody wallets like MetaMask.
Smith added that peer-to-peer transactions must be carried out privately. However, the Blockchain Association boss acknowledges a need to regulate the process of going from cash to crypto and vice versa.