Regulatory Crackdown Feels ‘Like a Crypto Carpet Bombing’: Blockchain Association CEO
by Arthur · February 15, 2023
In a recent interview on CNBC’s Squawk BoxCEO of the Blockchain Association, Kristin Smith, said the recent regulatory crackdown on the industry felt “like a crypto carpet bombing.”
The Blockchain Association is a crypto lobby group consisting of nearly 100 members. It is funded by many for-profit crypto companies, including Kraken, Digital Currency Group (DCG), and the Filecoin Foundation.
Last week, the SEC hit crypto exchange Kraken with a $30 million fine for not properly registering its betting service with the commission.
On Monday, reports emerged that the SEC was also preparing to sue Paxos, the stablecoin provider behind the dollar-pegged Binance USD, for violating investor protection laws. It was later confirmed that the New York Department of Financial Services (NYDFS) had also ordered Paxos to stop directly issuing stablecoins.
“If you look at these individually, what we have going on is we have different regulatory agencies coming in to take action, often enforcement action, or in the case of Kraken, a settlement, and trying to ‘rein in’ the industry,” said Smith.
The CEO added that regulatory scrutiny has been tightened in the wake of last year’s FTX collapse, saying “regulators were largely caught flat-footed in anticipating what turned out to be one of the biggest frauds since Bernie Madoff.”
Smith instead presented Europe’s regulatory approach, which she said provides “comprehensive legislation that assigns the appropriate responsibility to regulators to address the risks inherent in these networks.”
The EU’s Markets in Crypto-Assets (MiCA) regulation is expected to come into play in early 2023 and looks set to clarify various regulations surrounding cryptocurrencies across the bloc.
Smith takes aim at lawmakers
The CEO also hit out at statements from Elizabeth Warren who yesterday criticized the crypto industry’s failure to adequately apply money laundering rules in a hearing.
“These laws apply to middlemen” like Coinbase, Smith argued. “I think what Elizabeth Warren is referring to is having Know-Your-Customer (KYC) programs for self-hosted wallets. And the reality is that this is impossible.”
She compared it to sharing how much money you have in your wallet with the government, saying there is a need for “peer-to-peer transactions to happen in a private way”.
Still, the Blockchain Association chief acknowledged that “when you go from crypto to cash or cash to crypto” that should be regulated.
