Update on United States Crypto Regulation

10 February 2022

Current Situation

United States Crypto Regulations have made headlines and created many discussions in recent months. In 2022 we are seeing a clear focus on regulation in the U.S. especially after the breaking news that the Biden administration wants Crypto Regulations to be a matter of National Security.

February is going to be an interesting month for U.S. crypto regulations. The national security memorandum, expected to be released in February 2022, will give government agencies 3 – 6 months to develop regulatory proposals. The White House will then act as the policy coordinator, however they will not give regulatory recommendations.

The parties involved in looking holistically at digital assets and developing a set of policies are the following:

  • The State Department,
  • Treasury Department,
  • National Economic Council,
  • Council of Economic Advisers &
  • White House National Security Council.

The involvement of the White House National Security Council is because digital assets do not stay in one country and working together with other countries is necessary.

The Bank of America has stated that once rules are in place it will eliminate uncertainty over how to invest in the crypto market and if looked at in the long run regulations could be very positive.

Crypto Wallet Rule

The Crypto Wallet Rule will enforce know-your-customer (KYC) on un-hosted or self-hosted crypto wallets. Know-your-customer requires crypto trading platforms to collect names, addresses, and other personal details from all individuals who want to transfer cryptocurrency to their private wallets.

This rule was first brought up by former Treasury Secretary; Steven Mnuchin in 2020. It received a lot of scrutiny and resistance back in 2020 as it could be impossible for some wallets to implement.

However, on Monday, 31 January 2022; The U.S. Treasury Department posted the proposed rule in the Federal Register:

FinCEN is proposing to amend the regulations implementing the Bank Secrecy Act to require banks and money service businesses to submit reports, keep records, and verify the identity of customers in relation to transactions involving convertible virtual currency (CVC) or digital assets with legal tender status held in un-hosted wallets, or held in wallets hosted in a jurisdiction identified by FinCEN, according to the Federal Register post.

This means the Crypto Wallet Rule is being looked at again and considered.

The Beginning

The U.S. has no legal framework for the regulations of cryptocurrency exchanges, with this said it is about to change very quickly in 2022. More rules are on the way, whether you agree with regulations or not. This is the beginning of change and we believe that 2022 is going to be a year with a lot of regulation movement.