TechREG Weekly: Crypto Community Steps Up Efforts to Influence Lawmakers

After months of reading how lawmakers around the world are proposing new crypto regulations, crypto firms have decided to organize themselves to have a say in the design of these new regulations.

Last week in Paris, a group of crypto firms sent a letter to EU lawmakers urging them to change proposed legislation on crypto assets and anti-money laundering. In the U.S., crypto firms are also reacting very differently to two proposals from the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Digital platforms closely watched the U.K. and EU Parliaments this week as parliamentarians negotiated bills that could significantly increase their responsibility for the content posted on their platforms. FinTech firms in the U.S. may be one step closer to having direct access to payment rails as the Federal Reserve ends a consultation about how to evaluate requests to access master accounts.

Crypto Community Teams Up

The crypto community realized that it is not as well organized to influence lawmakers in Europe as it is in the U.S., so during the crypto summit in Paris last week, the crypto community took the first steps to have a common voice. In a joint letter, crypto businesses asked EU policymakers to exempt decentralized initiatives from the necessity to register as legal entities and to leave decentralized stablecoins out of the MiCA regulation.

Read more: EU Crypto Industry Coordinates Efforts to Amend EU Rules

In the U.S., the crypto community had the opportunity to give comments to different proposals from two regulators, adopting very different approaches. The SEC has the crypto sector up in arms for the second time in a month over what it deems an attempt at backdoor regulation. The issue is whether the SEC’s definition of a stock exchange should be expanded to encompass “communications protocol systems” that “bring together buyers and sellers of securities,” which many experts feel would include cryptocurrency exchanges, particularly decentralized exchanges (DEXs).

Read more: DeFi Advocates Cry Foul on SEC Again — This Time, Over Attempts to Define ‘Exchange’

The CFTC, on the other hand, launched a consultation to amend some of its registration rules for derivative clearing organizations (DCO). The overwhelming majority of the 387 submissions not only support the proposed changes, but praise the CFTC for this initiative.

Read More: CFTC Lures Crypto Community with Rule Changes, Consultations

The International Monetary Fund (IMF) advocated for a global crackdown on cryptocurrencies that would bring them into the capital control regimes that oversee traditional assets, citing fears of sanction-busting that have developed since Russia’s invasion of Ukraine. The global financial stability monitor said in a study released Tuesday (April 19) that the violence has sent “shockwaves” that are putting the world’s “financial system’s resilience” to the test.

Read more: Citing ‘Cryptoization’ as a Sanctions Threat, IMF Calls for Capital Controls

Digital Platforms Wait for New Regulations in Europe

Google, Facebook, and other digital platforms are waiting to see what the next steps are in the legislative processes to adopt the Digital Services Act (DSA) in Europe and the Online Safety Bill in the U.K. The DSA is a groundbreaking law that will make Big Tech corporations responsible for illegal content uploaded on their platforms, requiring them to put in place systems to ensure that the content is removed as soon as possible. The DSA could be unveiled on Friday, April 22. The U.K. parliament discussed on Tuesday the Online Safety Bill without any significant development, and it moved the debate to May.

Read more: EU Could Unveil Digital Services Act on Friday, But Not a Done Deal

Former Deliveroo executives were penalized by a French court for abusing the freelance status of the British food delivery platform’s staff. The executives were given suspended one-year prison sentences and fined €30,000 ($32,380) while Deliveroo was fined the maximum penalty of €375,000 ($405,000) and required to post the verdict on its French home page for one month. The verdict could have ramifications beyond France, as the gig economy faces an increasing number of legal issues that could transform working conditions.

Read more: French Court Fines Deliveroo, Challenging Gig Work Status

Banking Regulators End Consultations on Fraud, Payments

The European Banking Authority (EBA) just wrapped up a public consultation that began in January with the goal of better understanding payment fraud trends in Europe and determining the origins of certain forms of fraud by payment method. The data obtained could be used in upcoming discussions to update the Payment Service Directive 2 that governs payments in Europe.

Read more: EU Banking Authority Payment Fraud Consult May Impact PSD2

The Federal Reserve ends today, April 22, a public consultation for its updated guidelines to evaluate requests for accounts and services at Federal Reserve Banks. This update responds to the need to adapt to new financial technology companies that offer new payment methods, including cryptocurrencies. Digital-asset-focused companies like Kraken or Custodia, who recently obtained routing numbers, could benefit from these new guidelines.

Read More: Fed Ends Consultation With Kraken, Custodia Nearing Access to Payment Rails