Binance looms large at blockchain trade group D.C. policy summit
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Blockworks reporter Casey Wagner, Sen. Kirsten Gillibrand, and Sen. Cynthia Lummis at the policy summit. Photo: Crystal Kim
Illicit finance, surveillance, and the slippery slope of regulatory micromanagement are likely to remain central in crypto regulation discussions.
Driving the news: Those themes came up as crypto firms and policymakers offered their perspectives at the Blockchain Association's policy summit yesterday in D.C.
Flashback: Binance loomed large, though the world's largest crypto exchange — not a member of the industry group — wasn't at the conference.
- Its recent admission of money laundering and agreement to a monitorship as part of a historic treasury department settlement added to industry specter of coming regulatory micromanagement.
Reality check: National security concerns amid raging geopolitical tensions make for sensitive discussions. And multiple crypto bills are floating around as various regulatory agencies promise to crack down on terrorism financing and other illicit use of digital assets.
Of note: Policymakers advocating crypto show varying degrees of willingness to play ball in that context:
Majority Whip Tom Emmer (R-Minn.) homed in on central-bank-issued digital currency: "CBDC is nothing more than a surveillance tool."
- He also spoke of central bankers putting up "roadblocks to snuff out innovation" and federal government agencies' moves to "swallow this up."
- "That's the fight you and I are in," he said in a nod to his CBDC bill that seeks to recognize individuals' rights to financial privacy.
Of note: Folks who attended Wednesday's closed-to-media talks, spoke of House Financial Services Chair Patrick McHenry's preference for a good stablecoin bill, or else leaving regulation to the states.
Sens. Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-Wyo.), who are spearheading a broad crypto regulatory framework, say the tweaks are coming.
- The Gillibrand/Lummis bill previously recommended Treasury issue a study on mixers and tumblers, crypto privacy tools that obfuscate details of a transaction. But Lummis indicated a possible change: "They may now be more ready to engage with us on statutory language."
- U.S. deputy treasurer Wally Adeyemo said the agency recommended to Congress ways to "expand our authorities and broaden our tools and resources to go after illicit actors in the digital asset space."
The big picture: "To your point on Binance, clearly you see the government sending a message that this type of behavior is not acceptable, that being said, it's also signaling what type of behavior it does think is acceptable," Jason Somensatto, chief policy officer at Chainalysis, said.
- "There is a divide right now between what this industry envisions is its future path and what the government is focused on."
