America's Slow-Moving, Confused Crypto Regulation Is Driving Industry Out of US (arstechnica.com) 74
An anonymous reader quotes an excerpt from an Ars Technica article: In the United States, the lack of regulatory clarity threatens to slow down not just mainstream adoption of new technologies but also innovation in digital payment options, potentially cutting off consumers and businesses nationwide from sought-after conveniences, simply because regulators can't keep up with how digital assets are being used today. "There has to be some clarity that comes out, some standards, some ideas of the dos and the don'ts and some structure around it," said May Zabaneh, PayPal's vice president of product in blockchain, crypto, and digital currencies during a Money 20/20 session focused on how people use crypto to make digital payments. "Otherwise, that mainstream adoption will really be inhibited." According to Zabaneh, digital payment processors need government agencies to ensure much more stability before the companies can confidently "explore the potential" of using digital assets like stablecoins or central bank digital currencies to provide alternative payment options in e-commerce. She said that even though PayPal has a responsibility to continue innovating in digital payments, efforts can become stalled because "there needs to be more clarity around regulation," particularly regulations around consumer protection and the tax implications of using digital assets. These are areas US agencies have only just begun considering, and that's holding innovation back. "In order for things to become mainstream, they have to be easily accessible, easily adoptable," she said.
Zabaneh was not alone in calling for regulatory clarity to drive innovation. Executives from other payment processors like Checkout.com, cryptocurrency exchange platforms like Coinbase, and banks like JPMorgan Chase all repeated the same call in their sessions, warning that US fears over digital assets involved in financial crimes created hard-to-navigate compliance risks for those most invested in driving innovation. The executives said the US is moving so slowly in passing laws and establishing rules that industry leaders will start to conduct business elsewhere. Experts at Money 20/20 said this is already happening. The US wants to be on the leading edge of digital currencies, but tension remains between what President Joe Biden wrote in an executive order this year concerning the country's economic "interest in responsible financial innovation" and the wide-ranging security risks, including those to consumers and businesses, as well as to national security. To keep fintech leaders doing business in the US and participating in what's become a trillion-dollar market, Tufts University cybercrime expert Josephine Wolff told Ars she thinks the country must first prove it can prevent illegal activity and other security risks associated with digital assets. [...]
The US government has struggled to keep up with the way digital assets are used but seems determined to crack down on illegal uses while simultaneously pushing aggressively forward with government-backed digital assets, like a central bank digital currency. Wolff said that because many in the government don't know how digital currencies are used, both legally and illegally, legislators are unsure how to regulate new digital assets. Meanwhile, digital payment technologies continue to evolve. New uses emerge, and policymakers are continuing to look at the US's existing financial regulatory framework while asking basic questions. Is this digital asset considered a form of currency like a security (such as bitcoins), or is it being traded like a commodity (such as non-fungible tokens)? Or is some new legislation, such as the Stablecoin Transparency Act, needed to regulate emerging digital assets? Until mainstream adoption of technologies makes evident the most common uses of digital assets, regulators will continue struggling to make clear laws defining how digital assets can be used. Wolff told Ars it's a difficult policy agenda to navigate because "each of these new digital assets we see creates new opportunities for crime." "The United States is trying to balance two somewhat at-odds priorities: We want this technology to be sufficiently regulated and traceable so that we can conduct law enforcement investigations and hold criminals accountable," Wolff told Ars. "But we also want it to be flexible enough that people can invent new things and experiment with new models and innovate. So I understand why companies are saying, 'Well, look, we could innovate more if you told us exactly what's allowed.'"
"Regulation of the financial services industry has a bad name, and rightfully so," said Consumer Financial Protection Bureau's director, Rohit Chopra, but CFPB was motivated to activate a dormant authority in the Consumer Financial Protection Act to ensure the US benefits from "a more decentralized and neutral consumer financial market structure" that "has the potential to reshape how companies compete in the sphere."
"That could mean the most innovative companies capture the largest parts of the US payments market," reports Ars, citing Wolff. "And as the market favors technologies and consumers adopt trusted digital assets, that could help regulators who still aren't sure how to craft policy for digital assets."
Zabaneh was not alone in calling for regulatory clarity to drive innovation. Executives from other payment processors like Checkout.com, cryptocurrency exchange platforms like Coinbase, and banks like JPMorgan Chase all repeated the same call in their sessions, warning that US fears over digital assets involved in financial crimes created hard-to-navigate compliance risks for those most invested in driving innovation. The executives said the US is moving so slowly in passing laws and establishing rules that industry leaders will start to conduct business elsewhere. Experts at Money 20/20 said this is already happening. The US wants to be on the leading edge of digital currencies, but tension remains between what President Joe Biden wrote in an executive order this year concerning the country's economic "interest in responsible financial innovation" and the wide-ranging security risks, including those to consumers and businesses, as well as to national security. To keep fintech leaders doing business in the US and participating in what's become a trillion-dollar market, Tufts University cybercrime expert Josephine Wolff told Ars she thinks the country must first prove it can prevent illegal activity and other security risks associated with digital assets. [...]
The US government has struggled to keep up with the way digital assets are used but seems determined to crack down on illegal uses while simultaneously pushing aggressively forward with government-backed digital assets, like a central bank digital currency. Wolff said that because many in the government don't know how digital currencies are used, both legally and illegally, legislators are unsure how to regulate new digital assets. Meanwhile, digital payment technologies continue to evolve. New uses emerge, and policymakers are continuing to look at the US's existing financial regulatory framework while asking basic questions. Is this digital asset considered a form of currency like a security (such as bitcoins), or is it being traded like a commodity (such as non-fungible tokens)? Or is some new legislation, such as the Stablecoin Transparency Act, needed to regulate emerging digital assets? Until mainstream adoption of technologies makes evident the most common uses of digital assets, regulators will continue struggling to make clear laws defining how digital assets can be used. Wolff told Ars it's a difficult policy agenda to navigate because "each of these new digital assets we see creates new opportunities for crime." "The United States is trying to balance two somewhat at-odds priorities: We want this technology to be sufficiently regulated and traceable so that we can conduct law enforcement investigations and hold criminals accountable," Wolff told Ars. "But we also want it to be flexible enough that people can invent new things and experiment with new models and innovate. So I understand why companies are saying, 'Well, look, we could innovate more if you told us exactly what's allowed.'"
"Regulation of the financial services industry has a bad name, and rightfully so," said Consumer Financial Protection Bureau's director, Rohit Chopra, but CFPB was motivated to activate a dormant authority in the Consumer Financial Protection Act to ensure the US benefits from "a more decentralized and neutral consumer financial market structure" that "has the potential to reshape how companies compete in the sphere."
"That could mean the most innovative companies capture the largest parts of the US payments market," reports Ars, citing Wolff. "And as the market favors technologies and consumers adopt trusted digital assets, that could help regulators who still aren't sure how to craft policy for digital assets."
Scare headline much? (Score:4, Informative)
Someone misspelled "will have little or no effect at all".
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It's also confusing "digital assets" with technology.
Re: Scare headline much? (Score:2, Insightful)
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Yeah, America's slow adoption and regulation of Cryptocurrency is causing confusion among speculative con artists.
FTX CEO Sam Bankman-Fried was certainly worried about regulations on his FTX exchange when his holdings value dropped $15 Billion in one day. There also aren't any regulations on the speculative holding of rare baseball cards or Gathering of Magic cards. Other than you have to pay capital gains on the proceeds on all three when you sell them at a profit.
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Go read the Ars Technica comments (Score:3)
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sure buddy, are you trying to get modded Funny?
Re: Go read the Ars Technica comments (Score:3, Funny)
No, I'm trying to get modded "+1, Troll". I'd really like to be "+5, Troll" but that doesn't seem to be possible anymore.
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"will have little or no effect at all".
Perhaps. But neither the government nor Slashdot pundits have good track records at picking winners in technological innovation.
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Government moves slow for a reason, it keep public monies from being squandered on the most recent "hula hoop", and slashdot... well it is getting a little longer in the tooth and less likely to jump when told to
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it keep public monies from being squandered
What "public money" is being "squandered" on crypto?
Re:Scare headline much? (Score:5, Insightful)
I would place it under the "And nothing of value was lost."
People could argue that cryptocurrencies have brought a ton of wealth. Well, they brought with it a bubble, and an incredible minefield of fraud and scams across the board, all waiting to slurp a newcomer dry. Just getting people to understand that an exchange is not a bank and a custodial wallet can mean losing all one's holdings (a la MtGox) is something that is a possible thing that can happen.
Now, the absolute stupid part of crypto: If someone had $100,000 sitting physically somewhere, that money would be in a safe, likely something rated for such. With crypto, people buy it and use unknown, untested apps, on devices that are certainly not rated for physical attack (decapping, etc.) for that much cash. Until someone makes crypto wallets which can actually support the security of even a single Bitcoin, it is not something to be taken seriously.
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People could argue that cryptocurrencies have brought a ton of wealth.
And that argument mostly comes from people on the winning end of the zero-sum game, and greater fools who think if they HODL long enough they'll beat the odds.
Re: Scare headline much? (Score:1)
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Indeed - good riddance. Please, let all crypto companies move to Russia or North Korea.
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Good (Score:5, Insightful)
Don't let the door hit you in the ass on the way out -we don't need ass prints on the door!
Arrows in their back (Score:5, Interesting)
Indeed, let other countries be the guinea pigs. If and when they perfect it and clean up the crime element, THEN we'll clone their top ideas.
IT fads should be treated the same way, then we wouldn't have gotten all that OOP spaghetti, NoSql spaghetti, Microservice spaghetti, DOM/CSS spaghetti (redundant), cloud spaghetti, Microsoft, etc.
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Each of those tech trends solved a particular problem. Nothing wrong with any of that tech, per se. The problem was management requiring the use of fotw trendy tech simply because it was trendy.
Our biggest client when I was at crypto bullshit web3 company wanted us to build a site/app for them based on block chain. What they wanted was very hard/virtually impossible in web3 but it -had- to be web3 so I designed a web1 architecture (pretty much just lamp stack, 3 layer, textbook stuff) and glued a web3 in
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Came here to say this. Less financial risk for the US and involvement in money laundering and criminal finance.
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Even at that, the US $100 bill will remain the currency of choice for "hard" money
"Industry" (Score:4, Insightful)
Maybe it was just worded this way because the headline was already long, but the financial services "industry" is not really industry as most would think of the term, and seems close to how "Software Engineer" is not really an engineer...
Are we really concerned that incredibly complex ways to work with derivative funds are not as easy to do in the U.S?
It's sort of like complaining the roads into town need to be widened and smoothed so that we can have a much greater volume of snake-oil salesmen travelling through town.
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The first should be called "financial lobbyists" and the second "feature lobbyists".
I notice when one is not the one paying the bills, they will stuff it with features and scare the customer: "but just in case you should have Feature A..Z, thus you need MyFatStack to stay competitive."
What a complete (Score:5, Insightful)
Pretty please, tell me, exactly what "industry" is being driven out of the US by our lack of "crypto regulation". Crypto banks that promise risk free 45% annual returns that vanish overnight? Websites that cater to crypto bros who absolutely totally aren't simply gambling? Yes, please Uncle Sam, continue to do exactly what you're doing and drive these industries as far from our shores as possible. And nothing of value will be lost. These things don't actually make all that much money, and DEFINITELY don't currently do anything of real value. Nothing
They could in the future. That's true. But crypto and digital money are DEFINITELY things where it's WWWAAAYYY more important to get it done right, rather than to be the first. Let's take our time and make sure we do it correctly.
Re:What a complete (Score:4, Insightful)
our lack of "crypto regulation".
TFA is not complaining about a lack of regulation per se, but rather the lack of clarity that may mean onerous regulation in the future.
If the government said, "Crypto will not be regulated", that would be acceptable (caveat emptor).
If the government said, "Crypto will be regulated, and here are the rules", that would also be acceptable, assuming the rules are reasonable.
But the current situation of very little regulation combined with ambiguity and random threats from different political factions is unacceptable to many investors and entrepreneurs.
Hopefully, there will be some clarity after the midterms, when tech regulation can be based on economics rather than political populism.
Re: What a complete (Score:2)
Since when does political populism not take top priority?
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Regardless of whining by a few website-based totally-for-realsies crypto banks, it's simply too early to regulate crypto. The government has NO IDEA how the technology is going to play out. Nobody does. Better to simply enforce existing fraud and money laundering laws, and l
Well, good (Score:2, Insightful)
The primary thing that is keeping crytpto-"currencies" going is money laundering for organized crime (ransomware) and it is an extreme problem, large enough to noticeably decrease the GDP of western countries. Anything that causes problems for this industry is good.
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People keep saying stuff like this, but it's not true. Do I need to paste the same Chainalysis link showing that you're wrong?
Keep in mind that Chainalysis is in the business of tracking illicit activity involving blockchain. Among other things.
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Shill for whom? All of blockchain?
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Nope, you can keep your lies to yourself. I am quite confident using the estimates of how much ransom payments are actually made. Chainalysis is obviously missing most if it, after all the ransomware-gangs are well-funded and most of the ransom money does not get recovered.
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They aren't mine, and they aren't lies.
https://blog.chainalysis.com/r... [chainalysis.com]
Unlike you, they actually study this topic and have data to back it up.
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You should not believe everything a vendor claims. Also, number of transactions and even volume of transaction can be quite misleading, because money-laundering has quite different characteristics than "investment" transactions.
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Actually Chainanalysis is in the business of defining "illicit activity" as narrowly as it possibly can (involved in sales of illegal goods, mostly) so that it can pretend that the operations it is analyzing are not mostly money laundering, tax evasion and financial fraud.
More proof? (Score:4, Informative)
As if more proof was needed:
LBRY Sold Tokens as Securities, Federal Judge Rules [coindesk.com]
The SEC sued LBRY last March on allegations it sold its native LBC token in violation of federal securities laws
Give me a break (Score:5, Insightful)
America's Slow-Moving, Confused Crypto Regulation Is Driving Industry Out of US
First, given the lack of confidence in Crypto, the wild swings in valuation, and the absolute hacking disaster that has bedeviled the crypto marketplace...perhaps it would be a good thing for adoption to slow, for security to improve and valuation to stabilize. Just sayin'....
Second, it's a series of businesses, hardly what I would call an industry, that do not require a capital intensive physical infrastructure that is difficult to relocate. It's built on people and their skills, and people are mobile.
Third, it's better to have good regulation rather than rushed regulation. Good regulation requires a deep understanding of the economics, technology and market. It takes time to gain the experience in those fields, and rapid institution of regulations can create unintended perverse incentives that are hard or impossible to counter once they have constituencies to lobby for them to remain in perpetuity.
That's why "DeFi" = "Deregulated Finance" (Score:2, Insightful)
the lack of regulatory clarity threatens to slow down not just mainstream adoption of new technologies but also innovation in digital payment options
"Invented" in the USA, cryptofrauds like bitcon have taken advantage of the lack of regulations to perpetrate their scams.
That's why "DeFi" really stands for "Deregulated Finance"
--
If you average more than 5 posts/day on Slashdot, you're obviously a troll with too much time on their hands -Prof. Feynman
Lack of govt regulation is the primary sales pitch (Score:2)
Given that roughly 10 percent of Americans [insiderintelligence.com] own crypto assets (and there's no telling how many of them are like me, who took my free $15* worth of BitCoin from last year's Coinbase Superbowl commercial and have never used it), is there really a market for this anyway?
* (Currently worth $6.30)
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Sorry, $15.
No, now it's $10
Oh, actually $8.35.
Will you take $4?
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Nephew? Is that you?
My crypto bro nephew never saw a drop that wasn't a buying opportunity. It's always going to come back and go higher. Guaranteed, he says.
At least he has a good job and afaict has only about 20-25k in crypto so it'll be an expensive lesson not a live on the street or move into my basement situation.
paid for by half dozen ponzi scheme Coinbase (Score:3)
Design something that people actually want. (Score:4, Interesting)
'Oh but but the blockch...' oh fuck off.
My ugly monkey picture links also need a new home (Score:2)
They are bored with being in the US because there are just too many of them because some artist created thousands of them.
What a shame (Score:2)
Well (Score:2)
People always want to re-invent the wheel (Score:4, Interesting)
So buddy being interviewed makes the case that Web3 is completely new, better, and politicians aren't sure until their opinions are bought. But politicians being street smart want to be bought with US Dollars, not cryptocrap. So this could all take a while to play out.
Has any of the bros realized yet that they can't get real money out of the cryptoworld yet?
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They seem to believe they will do direct transactions in crypto one day. House, car, etc.
Of course not understanding those sellers will still need to convert to real money since crypto will not replace national currency.
I guess they believe their own bullshit about crypto having its own real economy either instead of or along side real money. I doubt most of them have thought this deeply about it.
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You transfer it to coinbase, sell it, and then withdraw to your bank account. Do you need like, tech support or something?
On the same front page (Score:2)
On the same front page at Ars:
Maybe, just maybe, there is a reason the banking industry built on long hard brutal experience from 1500 - 1940 isn't rushing to embrace "crypto".
Oh no. (Score:2)
Oh no.
Data point (Score:2)
(Lack of) Crypto regulation killing business you say? I've had this happen to two companies I've worked with so I must say I'm genuinely *shocked*.
Specifically, the Georgia department of Banking and Finance killed off the CampBx exchange and the US treasury department forced Casascius to stop selling preloaded physical bitcoins.
That's okay, I was able to work with some lovely Russian companies instead. :/
digital assets (Score:2)
"digital assets" LOL
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Digital assets.. like the upgraded sword from a p2w video game. That is a digital asset with real world value, as long as the game is popular.
Bitcoin, a digital asset of no value trying to find a problem to solve to justify its existence.
Good! (Score:2)
Let the fucking ponzi crap relegate itself to third world shitholes.
So? (Score:2)
Your congressperson's viewpoint on crypto - (Score:2)
"Well, it seems like the downside is that international criminals are enjoying record income with ransomware, and trade in arms, drugs and slave labor. And many individuals and businesses have lost everything to crypto scammers. So obviously we don't want to encourage that in the US.
"But OTOH, I'm a congressman. I have connections. I could do really well with crypto! And of course it's good to 'innovate' and keep the money changers who fund my re-election happy."
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Office holders don't need crypto. Just suit cases full of cash as a party favor after the hookers n blow.
"Industry" ? (Score:1)
I have no use for digital assets, crypto,Bitcoin (Score:2)
Let me be the 47th person (Score:2)
Let me be the 47th person to say good, fuck those fucking fraudster fucks.
GTFOH with your imaginary bullshit.
No offense but... (Score:2)
America's Slow-Moving, Confused Crypto Regulation Is Driving Industry Out of US
If an entire industry can be driven to extinction when here's little or no regulation, doesn't that mean the industry shouldn't exist in the first place?
Should say "current losses" (Score:2)
Crypto had a bad year. Honestly, it is still mainly thought of as a way for tech people to become rich, rather than a true technological innovation. While there are some practical applications, the reason most crypto miners exist is to make money, not solve a problem.
You want to bring it back to the US? Create more practical solutions to real world problems that use crypto.
One example would be some kind of ID for people. Something that is not dependent on a state actor to prove your identity can be very
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You want to bring it back to the US? Create more practical solutions to real world problems that use crypto.
One example would be some kind of ID for people. Something that is not dependent on a state actor to prove your identity can be very useful for refugees and political prisoners. Nice to be able to prove that you got a medical degree in Ukraine even if Russia happens to be occupying the medical school.
Crypto is now an "old" technology - we coming up on Bitcoin being 14 years old. This is positively elderly in the tech space. No real practical applications have emerged yet? Maybe they will after all, but it is not like there has not been tons of opportunity for that to launch.
Maybe cryptocurrentcy has just sucked up too much of the time, talent, attention and energy to do something that is not fraud or fraud-adjacent.
Boo Hoo (Score:3)
The US is the center of wealth in the world, and has an entrenched industry for handling money called banks. Of course they're not going to expose themselves to a new fad that exposes them to losses due to fraud or hacking, especially when the potential customers that would benefit from crypto are not lucrative markets.
Good. Its a scam,. We don't want it. (Score:2)
We dont want fake money. This digital currency crap is a scam, a long term hosting scam for NFT's that will vanish as soon as the host has to pay a bill to keep the NFT online. Not a single thing in blockchain is legitimate.