Cartoon: Rules of the road
“Rules of the road” by Ian Foley
This new cartoon illustrates the enforcement approach that the regulatory authorities in the US are taking with the crypto industry.
The federal government was quick off the mark in taxing crypto gains (2014), but rather than create new legislation along with industry players (as was successfully done at the onset of the e-commerce industry with the 1999 Gramm-Leach-Bliley Act for cybersecurity rights, for example), Congress has left management of the industry to regulatory agencies.
These agencies (for example, the SEC, CFTC, and Department of the Treasury) have not advocated for new rules as they did for some other new technologies, but instead point the crypto industry to the Howey Test that refers to a Supreme Court case in 1946.
Yet, as an example of what these agencies can do when they put their minds to it – on 21 March 2022, the SEC’s Climate and ESG Task Force within the Division of Enforcement issued a proposed ESG disclosures rule that would require public companies to disclose their greenhouse gas (GHG) emissions and other climate change risks. These disclosure rules went through a reasonable period of public and industry consultation, so the SEC’s Division of Enforcement does know how to do this!
Meanwhile, outside the US, new crypto regulation around the industry seems to be happily received by industry players in the EU (MiCA), the UK (Financial Services and Markets Bill), Japan (Payment Services Act) and Dubai (Virtual Assets Regulatory Authority guidelines), as examples.
So, what is it about the crypto industry in the USA that brings out government inertia or a failure to find common cause with industry?
You can find more of Ian’s cartoons here.
