Treasury Asks for Public Input to Shape Crypto Regulations—Including NFTs and DeFi

The U.S. Treasury today invited the public to comment on how digital assets are being used in crime—and what the government can do about it. 

Related to President Joe Biden’s March executive order to regulate the cryptocurrency industry, Monday’s request for comment aims to mitigate the risks associated with digital assets. 

It lists 23 questions touching on a number of topics, including the risks posed by NFTs (tokens used to represent ownership over digital items) and what the government can do to prevent crime related to DeFi—the world of decentralized, non-custodial trading, lending, and borrowing. 

“The growing use of digital assets in financial activity heightens risks of crimes such as money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption,” the Treasury’s document said.

“These illicit activities highlight the need for ongoing scrutiny of the use of digital assets, the extent to which technological innovation may impact such activities, and exploration of opportunities to mitigate these risks through regulation, supervision, public-private engagement, oversight, and law enforcement,” the Treasury continued.

The request for comment also touches on central bank digital currencies, or CBDCs—centralized versions of fiat money like the U.S. dollar, which are controlled by the government. 

A CBDC doesn’t yet exist in the U.S. but the government is researching such technology. Today’s document asked how the Treasury could incorporate CFT (combating the financing of terrorism) and AML (anti money laundering) controls into a future CBDC. 

The U.S. government is cracking down on crypto: since March’s executive order, the U.S. Treasury Department has banned Tornado Cash, a coin mixer used to anonymize Ethereum transactions. 

And just last week, the White House released its “First-Ever Comprehensive Framework for Responsible Development of Digital Assets” report.  

March’s executive order called for federal agencies, such as the Federal Trade Commission, and the SEC, to work together in order to regulate the crypto industry.

Answers to questions in today’s questionnaire must be received on or before November 3, the document said.