Expert reacts to potential U.S. regulation of crypto and Rep. Patrick McHenry’s comments
After Rep. Patrick McHenry stated at Consensus 2023 that crypto regulation could be on the way in the U.S. We sat down with Konstantin Shulga, CEO and co-founder of Finery Markets, to get his analysis on the situation.
Q. How important is legislation to oversee the crypto sector in the U.S.? What does this mean for the industry?
“Crypto businesses are being held back by a lack of clear regulations, but the tide may be turning. The EU has adopted MiCa regulations as a good example, and it is time for other financial authorities to follow suit.”
“As a trading solutions provider, we believe that having clear rules and regulations would reduce risks and make it easier for legitimate businesses to operate in the crypto space.”
The task at hand for financial authorities is incredibly complex, and any decision made could have devastating consequences. If the regulatory approach is not clarified, it could push crypto businesses away from the US, creating an imbalance.”
“The fact that there is market talk of an “Operation Choke Point 2.0” only adds to the urgency of the situation.”
“With clear guidelines for AML and KYC procedures, as well as how trades should be executed and reported, businesses can operate with confidence, and consumers can trust that their transactions and investments are safe and secure.”
“The benefits of regulation are clear: it will remove barriers, open up the market to a wider range of investors, and potentially drive up demand for crypto assets. It is time for the crypto industry to embrace regulation and continue to innovate and thrive while ensuring safety and security for all.”
Q. Are there any challenges politicians could face when trying to push the crypto legislation in “the next two months”?
“The financial authorities are currently faced with a complex task that has high stakes. It is crucial to make the right decision in order to prevent any potential negative effects on the crypto businesses in the US and to maintain balance.”
“The urgency of the situation is highlighted by market talk of an “Operation Choke Point 2.0”.
“However, there is currently a lack of consensus among US regulators on how best to approach the crypto industry. Furthermore, a lack of consistent and coordinated global policy frameworks from the IMF, FSB, or BIS means that a harmonised approach is necessary not only in the US, but also across the globe.”
“Many aspects of the financial system need to be addressed, including monetary policy, tax rules, legal status, and oversight requirements. Although this is a challenging task, it is important to tackle it head-on.”
Q. Are there any examples of legislation or bills from other jurisdictions that the U.S. could take as inspiration?
“The MiCa regulation is a good example of a recently adopted regulatory framework by the European Union for cryptocurrencies and other digital assets.”
“This recent adoption by the European Union covers a wide range of essential aspects related to crypto businesses, such as licensing requirements, investor protection measures, and regulations for crypto exchanges and trading platforms.”
“While some may see it as overly restrictive and a potential barrier to innovation, it’s a critical step towards legitimising the crypto industry in the post-FTX era.”
“The regulation is necessary to ensure that the industry operates within a regulated framework, which will ultimately benefit investors and businesses alike.”