Testimony from the Financial Integrity Network (FIN) released before a Sept. 3 hearing advises that system-wide governance should be established to regulate virtual asset service providers (VASPs), CoinTelegraph reported Monday (Sept. 2).
Some VASPs are regulated as money transmitters under the Bank Secrecy Act (BSA) while others escape regulation, said David Murray, FIN’s vice president for product development and services.
Although regulation could make it hard for some crypto firms to continue operations, Murray said it’s not the BSA’s job to accommodate everyone.
The FIN testimony also recommended that legislation gets passed that bans anonymous companies. The Improving Laundering Laws and Increasing Comprehensive Information Tracking of Criminal Activity in Shell Holdings (ILLICIT CASH) Act is one legislative initiative under consideration that would ban anonymous companies.
The testimony further stated that cryptocurrency regulations could be strengthened by creating a new class of financial institution: virtual asset transaction validators. The lack of system-wide financial crimes compliance (FCC) governance for some existing cryptocurrencies allows criminals space to operate and makes it difficult for the United States to isolate rogue service providers from the U.S. financial system.
The testimony also suggested that transparency of retail and other consumer payments improve. Changes in the payments industry are reducing the transparency of retail and other consumer payments throughout the value chain.
Japan and Switzerland have already developed legal frameworks that have attracted cryptocurrency projects and investment. Facebook chose to incorporate the group that will govern Libra in Switzerland. Crypto fans in Washington say regulatory clarity is vital to the sector’s growth.
The Internal Revenue Service is in the process of updating its 2014 guidance on cryptocurrencies following an April request from a bipartisan group of 20 lawmakers. It is part of a broader push to boost the nascent cryptocurrency industry. U.S. Congress, too, is considering at least three bills that would resolve some of the murky legal issues surrounding digital money.