Last week, the crypto industry in the United States saw the introduction of two new legislative initiatives. One of these bills, sponsored by Senator Jack Reed, aims to tighten the regulations and requirements for decentralized finance (DeFi) by imposing stricter Know Your Customer (KYC) and Anti-Money Laundering (AML) rules and sanctions. The bill would subject DeFi operations to the same regulations as other financial companies, including centralized crypto trading platforms, casinos, and pawn shops.
However, the legislation has faced criticism from major crypto lobbying groups, including Coin Center and the Blockchain Association. Both organizations have expressed concerns about the bill, describing it as messy, unworkable, and potentially unconstitutional. They argue that the existing federal law enforcement agencies already have the necessary tools and expertise to address the relatively small but important issues related to DeFi.
On the other hand, Republican House Agriculture and House Financial Services Committee members introduced the Financial Innovation and Technology for the 21st Century Act, which takes a different approach to regulating the crypto industry. This bill grants jurisdiction over digital commodities to the Commodity Futures Trading Commission (CFTC), clarifies the authority of the Securities and Exchange Commission (SEC), and establishes a process for digital assets initially deemed securities to be sold as commodities. Notably, Representatives French Hill and Dusty Johnson, who support the bill, sent a letter to SEC Chair Gary Gensler criticizing the agency’s “regulation by enforcement” approach to crypto.
In other news, several firms, including BlackRock, Fidelity, Invesco Galaxy, VanEck, and WisdomTree, have submitted spot Bitcoin exchange-traded fund (ETF) applications to the Federal Register. This step moves them closer to the Securities and Exchange Commission (SEC) review process. By publishing the applications in the Federal Register, the SEC now has the opportunity to accept or reject the requests, extend the review period, or allow for public comment.
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Meanwhile, Kuwait has become the latest jurisdiction to impose restrictions on cryptocurrency transactions. The country’s main financial regulator, the Capital Markets Authority (CMA), issued a circular outlining a complete ban on major use cases and operations involving cryptocurrencies. This includes payments, investments, and mining. The CMA also prohibited local regulators from issuing licenses that allow firms to provide virtual asset services as a commercial business.
In the world of crypto mining, Marathon Digital, a U.S.-based mining company, is facing a lawsuit from its shareholders. The lawsuit alleges that CEO Fred Thiel and other top executives breached their fiduciary duties, unjustly enriched themselves, and wasted corporate assets. The legal team claims that the management downplayed the company’s problems, artificially inflated its valuation, received excessive compensation, made lucrative insider sales, and received elevated bonuses based on false and misleading statements. The shareholders are seeking to strengthen the company’s governance by enhancing the board’s supervision, nominating shareholder candidates to the board, and changing the procedure for directors’ elections.
In conclusion, the crypto industry in the United States has seen significant legislative developments in recent weeks. The introduction of bills aiming to regulate DeFi and clarify the regulatory landscape for digital assets reflects the growing recognition and importance of cryptocurrencies in the financial sector. However, these initiatives have also sparked debates and criticisms, highlighting the challenges of striking the right balance between regulation and innovation in the crypto industry. Additionally, the ongoing pursuit of spot Bitcoin ETFs and the ban on crypto transactions in Kuwait further illustrate the various regulatory approaches being taken globally.
