BankThink

Mnuchin's late to the crypto regulation party

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U.S. Treasury Secretary Steven Mnuchin recently gave testimony to the Senate Finance Committee saying more regulations will be on the horizon for cryptocurrencies, citing the need for more transparency to prevent “secret bank accounts” or money laundering.

Transparency of regulations is certainly an area that needs to be improved in the cryptocurrency world. However, Mnuchin’s testimony isn’t new or revolutionary; last year, he pointed out cryptocurrencies’ role in supporting illicit acts such as ransomware, tax evasion and human trafficking, which has been known since 2012.

Also, over the past few years, more rules and regulations around cryptocurrency have emerged from the offices of different U.S. agencies on the state and federal levels, but they are often conflicting or ambiguous.

Recently, for example, the IRS claimed the virtual currencies used in popular video games like Fortnite and Roblox were equivalent to bitcoin’s use for tax purposes, and then promptly walked back that claim when it was pointed out and criticized.

It's a sign that government agencies are still in the early stages of understanding this fundamentally new technology.

Mnuchin’s testimony seems to be evidence of that, as he didn’t really suggest solutions beyond, “We realize this is crucial and are working on it.” After all, it was only recently that the U.S. government even acknowledged the growing trend of cryptocurrency adoption and blockchain technology advancements. The only certainties the U.S. government seems to have in place now are how people report profits from cryptocurrencies and how they’re taxed.

Bitcoin and other cryptocurrencies are still a long way from being in a position to be seriously considered for overtaking conventional currencies we use today around the world, like the dollar, the pound or the yen. Maybe it could become the new global currency, but only if that’s what people want.

It’s like a new language, except it’s currency, and government officials should learn this new language if they want to introduce measures to regulate it at the highest quality. Bitcoin, for instance, has had many detractors since its introduction about a decade ago, but it isn’t going away anytime soon.

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