USA Law and Practice Contributed by: Steven Molo, Robert Kry, Megan Cunniff Church and Walter Hawes, MoloLamken
different presidential administrations have tak - en divergent approaches to regulating digital assets. Until recently, federal regulators exercised exten - sive authority over digital assets and aggres - sively pursued enforcement. Typically relying on existing statutory frameworks, the Securities and Exchange Commission (SEC), Commod - ity Futures Trading Commission (CFTC), Inter - nal Revenue Service (IRS), Financial Crimes Enforcement Network (FinCEN) and DOJ issued overlapping regulations and guidance, often tak - ing the position that issuers, owners, and traders of digital assets were subject to numerous regu - latory requirements. For example, the SEC took a broad view of whether cryptocurrencies con - stitute “securities” subject to the disclosure and anti-fraud requirements of the federal securities laws. The CFTC similarly adopted the position that many digital assets constitute “commodi- ties” subject to its regulatory authority. Relying on those broad interpretations, federal prosecu - tors and regulators instituted many enforcement actions against digital asset companies for reg - istration and recordkeeping violations as well as fraud and market manipulation. The new presidential administration, however, suggests numerous changes to digital asset regulation are likely to occur. President Donald J. Trump has promised to make the United States the “crypto capital of the world” . Within days of taking office, President Trump signed an Exec - utive Order calling for the promotion of digital assets and blockchain technology, signalling a more lenient regulatory environment. The Execu - tive Order rescinded existing guidance and reg - ulations relating to digital assets and required federal agencies to review all existing regulations and guidelines affecting digital assets and rec - ommend which should be rescinded or modi -
fied. The Order further calls for a working group of federal agencies, including the DOJ, SEC, and CFTC, among others, to “propose a Feder- al regulatory framework governing the issuance and operation of digital assets” . The SEC has already begun accepting public comments to inform the development of that new framework. If adopted, the new federal framework will likely represent a stark contrast to the existing regula - tory approach to digital assets. Consistent with that policy shift, the SEC and CFTC have also signalled a shift in enforcement priorities. Both agencies have stated that they intend to avoid “regulation by enforcement” going forward, with the SEC voluntarily dismiss - ing several ongoing cases alleging registration failures and related violations against major cryptocurrency companies. But each agency has also expressed commitment to pursuing fraud and market manipulation in markets within their jurisdiction, including digital asset markets, and each has announced significant fraud-relat - ed cryptocurrency enforcement actions since President Trump’s inauguration. Individual states also have their own laws and regulations applicable to crypto-assets, but these provisions differ greatly from state to state. Many states regulate cryptocurrency under the existing rules applicable to money transmitter businesses, requiring companies dealing with digital assets to apply for a money transmitter licence. Some states also apply state-specific securities laws, often called Blue Sky laws, to digital asset companies. Still other states have developed cryptospecific regimes that overlay additional requirements, such as anti-money laundering requirements, on top of existing laws. In New York, for example, digital asset compa - nies must obtain a cryptospecific “BitLicense”
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