Crypto Assets and Digital Transformation: The State of Regulation

There are many use cases for blockchain technology. Still, the main inroads of this digital ledger framework have been in the finance sector, including the use of digital assets (e.g., cryptocurrency) and smart contracts. A recent report on the role of digital assets in the wider economy in 2022 discusses the state of adoption and regulation of digital assets in the US. Here are just a few of the relevant insights:

• The final Crypto-Asset Reporting Framework (CARF), a document that outlines a system for the automatic exchange of information regarding digital assets between countries, was released by the Organization for Economic Cooperation and Development (OECD).
• The White House released its “framework for responsible development of digital assets” in response to President Biden’s executive order to outline clear guidelines surrounding cryptocurrencies. It includes regulations targeted at the illegal use of cryptocurrency to skirt financial legislation.
• The Securities and Exchange Commission (SEC) is reportedly investigating whether the NFTs created and sold by Yuga Labs (of Bored Ape Yacht Club, Cryptopunks, and Apecoin fame) qualify as securities, and are thus subject to controls by the regulator. The SEC has been recently criticized by the senate for being insufficiently clear on digital asset regulation, although the agency insists that crypto markets fall under its purview.
• The US Treasury has requested public feedback on the risks of digital assets, including money laundering and potential terrorist funding.
• Meta (formerly Facebook) is being questioned by senators regarding their actions taken to prevent cryptocurrency scams. The senators referenced data held by the Federal Trade Commission (FTC) which stated that 67 percent of reported scam victims have been targeted on one of Meta’s platforms.
• Regulation of virtual currencies also proceeds on the state level. In September, the governor of California vetoed a cryptocurrency licensing bill so as to consider feedback from his investigations into how to establish a clear regulatory environment for Web3 companies. Missouri recently updated its money laundering laws to include cryptocurrency, and Louisiana has adopted new rules for digital asset firms.

Developments in crypto regulation are accompanied by an increase in legal action against various bad actors, including money launderers and fraudsters, which are detailed in the full report.

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