New Cryptocurrency Regulatory Framework Released

The U.S. Justice Department has published a long-in-the-making “enforcement framework” on cryptocurrencies.

U.S. Attorney General William Barr announced the report’s unveiling, stating that the goal is to ensure that cryptocurrency “does not imperil our public safety or our national security” is “vitally important to America and its allies.”

The report, entitled “Cryptocurrency: An Enforcement Framework,” details strategies the Department of Justice (DOJ) plans to take related to digital assets. Barr said the report would delineate priorities and strategies for the DOJ’s crypto enforcements.

The report also indicates an interest in how enforcement will work in the world of decentralized finance (DeFi).

“I am grateful to the Cyber-Digital Task Force for producing this detailed report, which provides a cohesive, first-of-its kind framework for those seeking to understand federal enforcement priorities in this growing space,” said Barr.

The report is divided into three parts, with the first providing a threat overview. According to the report, the illicit use of crypto usually falls into one of three categories: financial transactions for commissioned crimes; money laundering and shielding from tax reporting or other legal obligations; and hacks or theft of crypto venues. The second and third parts explore enforcement tools and ongoing challenges related to these types of crimes.

It also makes mention of the growing DeFi space, linking the initial coin offering boom (ICO) of 2017 with today’s activity. Regulators have said that DeFi regulation has been slow-moving, but the report indicates that law enforcement officials are keeping an eye on the space.

“The ICO boom from a few years ago has given way to the exponential growth of Decentralized Finance markets in recent months — with all the associated complexities and difficulties for enforcers seeking to stay ahead of the curve and keep investors safe,” said the report.

Much of the report focuses on the potential of cryptocurrency and blockchain technology — if threats are addressed. It acknowledges digital assets as a significant opportunity for U.S. advancement, calling them a “transformative way to store and exchange value,” and urging members of the industry to work together with regulators to come up with solutions to promote innovation and protections. 

“To promote public safety and protect national security, all stakeholders—from private industry to regulators, elected officials, and individual cryptocurrency users — will need to take steps to ensure cryptocurrency is not used as a platform for illegality. Indeed, for cryptocurrency to realize its truly transformative potential, it is imperative that these risks be addressed,” reads the report.