Joe Biden has “frozen” the proposal to regulate crypto wallets that had been proposed by former US Treasury Secretary Steve Mnuchin.
The proposal had been widely discussed because it would have obliged exchanges to know the identity of wallet owners to whom they transferred amounts exceeding $3,000. It would have been very difficult, if not impossible, for exchanges to comply with this rule. It could also have been a brake on the development of the industry in the United States, to the benefit of foreign exchanges.
However, one of the first acts of President Biden, who was sworn in yesterday, is to freeze all regulations that have yet to be issued so that the new administration can evaluate them.
The news has been welcomed by the industry. Jake Chervinsky, of Compound, tweeted:
President Biden has frozen all agency rulemaking pending further review. This includes former Secretary Mnuchin's proposal on "unhosted wallets."
We fought hard & earned the right to take a breath & reset. Janet Yellen isn't Steve Mnuchin. I'm optimistic.https://t.co/0EAmYhbqa5
— Jake Chervinsky (@jchervinsky) January 21, 2021
“We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic”.
Yellen’s role in the future regulation of crypto wallets
In reality, the freeze is not a victory. On the contrary, the dossier will now pass into the hands of the new US Treasury Secretary, Janet Yellen, who, however, cannot claim to be a cryptocurrency enthusiast.
Mnuchin’s regulatory proposal was designed to counter the use of cryptocurrencies for illicit purposes. The same concern seems to be driving Janet Yellen, who has argued the same point in recent days. The cryptocurrency sector is therefore facing some difficult times ahead.
But the freeze imposed by Biden will give them the opportunity to negotiate and possibly present their considerations. In short, they will be able to become interlocutors of the system, attempting to change the law.
The timing remains uncertain. Janet Yellen has not yet taken office. Her appointment must first be approved by the Senate. Once her role becomes effective, the situation may unblock and take a clear direction.
What is certain is that Janet Yellen’s recent statements have already had their effect, that of giving a (negative) shock to the market. It will be up to the crypto industry in the United States to change Janet Yellen’s mind and convince her that cryptocurrencies used for criminal purposes are only a tiny fraction of daily transactions. And perhaps this can save the industry.