Biden's administration is yet to properly regulate crypto and curb illicit use. (Photo by Chip Somodevilla/Getty Images)
Share
Key Takeaways
Stablecoins remain in regulatory limbo and are costing the U.S. crypto industry.
Industry participants argue that comprehensive regulations would help combat illicit financing.
Concerns over the industry being defined by its bad actors continue to grow.
Coinbase and stablecoin issuer Circle (USDC) are calling into question the Biden administration’s approach to crypto and the lack of regulation on stablecoins.
Despite making major progress with the landmark decision to approve spot Bitcoin exchange-traded funds (ETFs), U.S. politicians and enforcement agencies continue to treat crypto with a skeptical ire, which may be the root cause behind ongoing issues of illicit and illegal crypto activity.
Calls for Clarity
In a joint letter to Congress, Circle and Coinbase have urged lawmakers to establish comprehensive regulations for stablecoins and the digital asset market to tackle illicit finance.
It's not complicated: Stifling crypto in the United States empowers our adversaries and limits law enforcement's visibility into illicit activity and our ability to crack down on bad actors.
“The use of digital assets in illicit finance remains limited in comparison to traditional finance” the letter argues, highlighting that this is due to digital asset firms following U.S. regulations, and aiding enforcement agencies in clamping down on illicit or illegal activity.
Despite this, dollar-denominated stablecoins such as Tether (USDT) and Circle (USDC) remain under significant scrutiny for their use in illicit financing, which Circle and Coinbase argue comes as a result of unclear and incomplete frameworks around stablecoins and the crypto market structure overall.
An Industry Defined by Bad Actors
Speaking with Bloomberg, Circle’s Head of Global Policy, Dante Disparte, noted that despite the Biden administration’s issuance of an executive order to create a government study on digital assets, there remains a huge gap between this ‘action’ and Congress’s inaction on creating regulations, which does not allow for U.S. authorities to properly govern the space.
Disparte fears that these gaps will only serve to have the crypto industry defined by bad actors.
As a consequence of inaction, the letter argues that the U.S. is losing ground as a center of crypto innovation, with more and more unlicensed, offshore stablecoin issuers operating beyond its borders, thus allowing them to grow and potentially conduct illicit financing without U.S. regulatory oversight.
A Shared Objective
The industry is seemingly doing all it can to have an open and balanced dialogue with the U.S. government and regulators to create comprehensive laws that take power away from bad actors. According to Shirzad, this means having more dollar-denominated “U.S.-issued stablecoins,” which would stifle illicit use.
Though, for as long as regulators such as the U.S. Securities and Exchange Commission (SEC) continue to battle crypto firms such as Ripple (XRP) over how to classify tokens, the U.S. domestic crypto industry remains in limbo and will struggle to grow.
In his conversation with Bloomberg, Shirzad noted:
“The right way to regulate – particularly if the US is going to be a leader in digitial asset technology – is for Congress & the Admin to do what they say they want to do, which is to create comprehensive federal frameworks around crypto markets and around stablecoin issuance[…]”
With the embattled Ripple now looking to launch its own stablecoin, despite the ongoing and soon-to-be-concluded legal dispute between them and the SEC, regulators could soon be forced to legitimize the digital asset markets sooner than they thought.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
