In a recent interview on CNBC’s Squawk Box, Blockchain Association CEO Kristin Smith said the recent regulatory crackdowns in the industry felt “like a crypto carpet bombing.”
The Blockchain Association is a crypto lobbying group made up of nearly 100 members. It is funded by many for-profit crypto companies, including Kraken, the Digital Currency Group (DCG), and the Filecoin Foundation.
Last week, the SEC hit crypto exchange Kraken with a $30 million fine for failing to properly register its staking service with the Commission.
ECB Advises Banks Comply With Conservative Cap on Bitcoin Exposure
The European Central Bank (ECB) expects EU banks to introduce limits on their crypto holdings even before the Basel Committee on Banking Supervision’s (BCBS) global standards come into force in 2025. These standards have grouped cryptocurrencies into two groups based on the specific risks they pose, providing banks guidance on how to manage their exposure to each group. Bitcoin, for example, has been defined as an “unbacked” asset placed into group 2 of risky assets. Included in this tier, are a...
On Monday, reports emerged that the SEC was also preparing to sue Paxos, the stablecoin provider behind the dollar-pegged Binance USD, for violating investor protection laws. It was later confirmed that the New York Department of Financial Services (NYDFS) had also ordered Paxos to halt issuance outright of the stablecoin.
“If you look at these individually, what we have going on is we have different regulatory agencies that are coming in taking action, often enforcement actions, or in the case of Kraken, a settlement, and trying to sort of ‘rein in the industry,’” said Smith.
The CEO added that the regulatory scrutiny has tightened in the wake of last year’s FTX collapse, saying that “regulators were largely caught flat-footed in anticipating what turned out to be one of the largest frauds since since Bernie Madoff.”
Smith pitched Europe’s regulatory approach instead, which she said provides “comprehensive legislation that assigns regulators the appropriate responsibilities to address the risks that are inherent in these networks.”
The EU’s Markets in Crypto-Assets (MiCA) Regulation is expected to come into play in early 2023 and looks to clarify various regulations surrounding cryptocurrencies across the bloc.
Smith takes aim at lawmakers
The CEO also hit out at statements made by Elizabeth Warren who yesterday criticized the crypto industry’s failure to adequately apply money laundering rules in a hearing.
“These laws do apply to intermediaries” like Coinbase argued Smith. “I think what Elizabeth Warren is referring to is having Know-Your-Customer (KYC) programs for self-hosted wallets. And the reality is that this is impossible.”
U.S. Regulators Warn Banks That Crypto Is Not 'Safe and Sound'
The Federal Reserve and two other U.S. regulators today issued a warning to banks about cryptocurrencies. In a joint statement, the Board of Governors of the Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) said banks should be aware of the “significant volatility and vulnerabilities over the past year” the crypto industry experienced this year. The regulators added that banks with exposure to crypto could especially be...
She compared it to sharing how much cash you have in your wallet with the government, saying there is a need for “peer-to-peer transactions to happen in a private way”.
Still, the Blockchain Association CEO did acknowledge that “anytime you go from crypto to cash or cash to crypto” that should be regulated.
