One of the most pressing and long-standing issues within the NFT sector is regulations. Just as years ago, when cryptocurrency first came on the scene, NFTs have had a complicated relationship with regulatory bodies. While in some countries they are openly embraced by the government, other places like China have heavily restricted their use.
And now, in one of the newest NFT regulatory developments of the year, US President Joe Biden’s administration has released what it calls ‘Comprehensive Framework for Responsible Development of Digital Assets’ that covers both cryptocurrency and NFTs.
The Issue of Regulations
The document, which was released on September 16, 2022, follows Biden’s March 9 Executive Order which outlined some of the risks and benefits of digital assets. In response, several government agencies developed frameworks and policy recommendations to address the key areas outlined in the executive order.
These key areas were consumer and investor protection; promoting financial stability; countering illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation. Touching on consumer protection, the report emphasized that the various regulatory bodies need to come down harder on misconduct wihtin the industry, citing its volatility and the frauudlent claims often made by projects looking for investors.
“The reports encourage regulators like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), consistent with their mandates, to aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space,” the document says, also encouraging increased public awareness and education.
It also touched on the potential use of digital assets for illicit activities, noting that they are often used for money laundering and drug trafficking operations. Increased regulatory oversight and increased law enforcment were recommended as efforts to reduce this sort of activity.
According to the document, the US President will be amending the Bank Secrecy Act (BSA), anti-tip-off statutes, and laws against unlicensed money transmitting to include digital asset providers. For years, many had been excluded by way of technicality but after this amendment, they too will be subject to such regulations. The president will also “consider urging Congress to raise the penalties for unlicensed money transmitting to match the penalties for similar crimes under other money-laundering statutes” and expand laws to make sure that any such crimes can be prosecuted in any state in the US.
The document also touched on a potential Central Bank Digital Currency (CBDC) and the benefits it could bring, including financial inclusion, equity, and the preservation of US financial leadership.
The Future of Digital Assets in the US
The framework release shows many things; first, the US is seriously considering its future with regards to digital assets like NFTs and cryptos. It also shows that there is concern about the legality and regulatory aspects of these assets and how best to protect the public.
This is good news for the space as it could signal better laws being put in place and more adoption by the government.
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