I have a lot of respect for this woman for targeting only the bad, and offering support to the good.
"I’m really separating out the ICO space from the rest of the crypto community" - This is great news for legitimate projects like DNotes. The following are just a few of the Q/A from the interview:
The woman who led crypto policing in the US guesses what’s next for regulationWhat’s your gut feeling at the moment on the future of crypto regulation?In the last year there has been a lot of attention by the community on the ICO space, and
I’m really separating out the ICO space from the rest of the crypto community. There’s a lot of news and attention around that, so you’re getting a lot of regulatory focus. Not just because it’s new, but because of the amount of money being raised.
People in the ICO space are just focused on the Securities Exchange Commission [SEC], but all along I’ve said more agencies than just the SEC are going to be involved in bringing actions against ICOs. I mean Treasury, Commodity Futures Trading Commission [CFTC], Justice Department, possibly the Federal Trade Commission and Consumer Financial Protection Bureau, and not to mention state attorneys general, or state regulators. And this is just in the US.
When you’re talking about the exchange space, we’ve already seen the SEC issue a kind of warning to the exchanges not to offer what the SEC deems are securities. I don’t think they just issued that warning and they’re not going to do anything. I think they’re going to look and see: We issued this guidance and who didn’t follow it?
Things typically don’t end well for the people opposing the government. We saw this early on with FinCen [the US Treasury’s Financial Crimes Enforcement Network] in 2013, when it issued the first guidance of any US regulator. It was saying virtual currency must follow things like the Bank Secrecy Act, or register with FinCen. They didn’t go immediately and do a bunch of enforcement actions. They waited to see who wasn’t following that guidance and they started bringing that action.
What entities are in the government’s cross-hairs?From my time in government I happen to know, and I can’t comment on those publicly. We’ve already seen that the DOJ and SEC are looking at exchanges. DOJ did the prosecution of BTC-e. They did a joint action with Treasury. Treasury assessed a $110 million penalty and DOJ criminally indicted that entity.
We have also seen the SEC issue that statement warning exchanges. I think one could draw inferences that the government is looking to exchanges. But they’re not just looking to exchanges.
What are the other regulatory hotspots?I think a regulatory hotspot is ICOs. I think that’s where we’re going to see the regulatory action. Factors that the government will typically, but not exclusively look to: They would look to size; how much money was raised? Whether there was any product already built; did investors lose money? And atmospherics: We’ve seen a lot of investigative reporting. Regulators also read the news. Are any ICOs getting a lot of negative publicity? Those are four things. A fifth thing is, where are they located? Where is the product the ICO produces located? Where are the people who invested located? Here is where I make my point about extra-territoriality: Just because something is not headquartered in the US doesn’t mean they won’t look at it. The DOJ and FBI have more ability to bring cases outside their jurisdiction. The SEC is by and large all in the United States.
Another hotspot will be cases of pure fraud. You’re not going to get creative or stretch the law at all. Will this be brought under the Computer Fraud and Abuse Act? I think not. I think it’s just traditional cases of wire fraud that are going on. Clear-cut cases of fraud is another area we will see some regulatory action.
The SEC chairman has named “gatekeepers” such as lawyers among the bad actors in ICOs. Will any high-profile lawyers or other big firms who advise on ICOs get caught up in regulatory actions?I had the occasion to meet with [SEC chairman] Jay Clayton at Stanford recently. He reiterated the point about the gatekeepers failing, and he got quite a bit of pushback on that. I can’t really speculate, but I think something is definitely in the works there, from his comments.
That said, I’d be pretty surprised if it were some of the big—these are your words—firms. But I don’t know.
https://finance.yahoo.com/news/woman-led-crypto-policing-us-080014217.html