Prime Trust Releases 2022 U.S Crypto Regulation Report

With a large number of state and federal laws, numerous regulators providing conflicting guidance, and antiquated systems in place, Prime Trust’s 2022 State of Regulation Report: "Untangling the Web of Federal Crypto Regulation" is targeted at organizations and professionals interacting with the digital asset economy and in need of a summary overview.

Drafted with insights from Prime Trust’s CEO, Tom Pageler, and VP of Regulatory Affairs, Jeremy Sheridan, the report overviews the most important information necessary to untangle the knot of today’s complex U.S crypto regulatory ecosystem. The report takes a deep dive into:

• The history behind the regulatory bodies looking to bring digital assets under their jurisdictions
• Why the CFTC and SEC each believe they are best organization to oversee the regulation of virtual currencies, the validity of their arguments, and the limitations of each agency.
• The three most important crypto bills to watch as digital asset regulation continues to push itself into the forefront of the political arena

The report contextualizes how the United States arrived at its current position, the legislation impacting digital assets, and their potential effect on future adoption. "Quality regulation is one of the bigger hurdles the crypto space has come to face in recent years," says Pageler. "Having worked in traditional finance, I have seen the benefits of clear, efficient regulation firsthand. It’s vital for any industry going through hypergrowth to have guardrails in place and understand what is expected of them. Building houses on an unstable foundation is a recipe for disaster."

The report identifies three main reasons for the current dire state of the U.S crypto regulatory landscape. (1) the lack of a clear governing body to oversee virtual assets, (2) the insistence that decades-old laws governing traditional financial institutions are adequate to apply to decentralized assets, and (3) misconceptions (particularly related to criminal use) that continue to permeate lawmakers’ positioning when proposing regulations relevant to blockchain-enabled technology.

The authors say that although a slew of legislation has come out at both a federal and state level, many of these laws are confusing or simply don’t fit the new digital economy, As a result, digital asset businesses are often left carry the burden and overhead involved in trying to interpret their responsibilities, and any misinterpretation can result in fines, productivity loss, and other issues.

"Most people aren’t aware just how many regulatory frameworks exist in finance or the history behind them," says Regulatory Affairs head Jeremy Sheridan. "For those in the crypto industry, that is no longer an option. We must work with lawmakers to create efficient and understandable laws that help the industry grow while not constraining the space’s explosive innovation."

The current US regulatory landscape is cluttered and complex. Source: Untangling the Web of Federal Crypto Regulation

The report identifies what Prime Trust believes are the three pieces of proposed regulation that are most likely to significantly impact the sector if enacted by the U.S. Senate. They are the Lummis-Gillibrand Responsible Financial Innovation Act, the Digital Commodity Exchange Act, and the Digital Commodities Consumer Protection Act of 2022. Among other things, these bills would change how digital assets are classified, monitored, and taxed, and the compliance obligations organizations will face in their crypto related operations.

The authors say the guide will provide the industry with a deeper understanding of current regulatory laws and the potential innovations on the table. Additionally, they hope regulators will gain better insight into how laws could be improved, how that improvement will ultimately benefit the financial sphere, and why it’s important for them to seriously acknowledge and provide direction for digital assets.

Download the report here.