Despite the approval of the Ethereum spot ETF, the Biden administration’s stance on cryptocurrencies remains unchanged: all moves against the sector.
On May 30th, through a post on X, Scott Johnsson, a lawyer at the financial group Van Buren Capital, expressed criticisms regarding a series of actions and policies undertaken by the Biden administration towards the cryptocurrency sector. Johnsson argues that, despite some positive actions such as the approval of the Ethereum spot ETF, the Biden administration’s stance remains strongly antagonistic towards Bitcoin and cryptocurrencies.
Rejection of the “fair access” banking rule
Johnsson begins his analysis by addressing the rejection by the Office of the Comptroller of the Currency (OCC) to approve the “fair access” banking rule. The “fair access” rule in the US banking system, advocated by former Comptroller Brian Brooks, is a regulation aimed at ensuring fair and non-discriminatory access to banking services for all customers, preventing banks from denying financial services for political or ideological reasons or factors such as race, gender, or income level. The administration’s refusal to approve this rule demonstrates a strong resistance to dismantling regulations that financially discriminate against businesses operating in the digital asset world.
The actions of the SEC
Johnsson continues his analysis by highlighting all the actions taken by the SEC in recent months. Numerous enforcement actions have been taken against major exchanges such as Coinbase, Binance, and Kraken. Johnsson describes these actions based on an “extremely expansive and unimaginable definition of security,” which has led to a climate of uncertainty among industry businesses regarding potential legal actions and the broad application of securities law.
Other actions by the SEC include sending numerous Wells Notices to companies such as Consensys, Uniswap Labs, and Paxos. Furthermore, the SEC has extended the “dealer rule” to encompass DeFi platforms, requiring them to register as exchanges and comply with Regulation ATS, a set of rules established by the commission to regulate trading platforms that do not operate according to national rules. For the SEC, the definition of “dealer” applies to anyone engaged in trading security activities, including digital assets. This decision aims to question the decentralized nature of DeFi platforms, raising doubts about their ability to operate within the current regulatory framework.
IRS maneuvers and DoJ actions
Recently, the IRS, the agency responsible for federal tax collection, has expanded its definition of “broker” to potentially include individuals and entities beyond traditional brokers. This change could have implications for DeFi platforms, limiting their operations in the United States.
Johnsson also highlights the Department of Justice’s (DoJ) departure from the guidelines established by FinCEN in its actions against Tornado Cash and Samourai Wallet, accused of operating without a license as a Money Service Business.
Banking and institutional barriers
The analysis continues with the Federal Deposit Insurance Corporation (FDIC) suggesting banks to maintain a cryptocurrency deposit threshold at 15%. Similarly, the Federal Reserve’s rejection of Custodia Bank‘s request to become a member of the Federal Reserve System and its refusal to grant a master account demonstrate a collective effort to limit cryptocurrency involvement in the banking sector.
Furthermore, the Federal Reserve, FDIC, and OCC simultaneously issued statements highlighting the perceived risks banks face when engaging with cryptocurrencies, discouraging direct exposure to digital assets.
Political and legislative resistance
Even within the US Democratic Party, there are figures opposed to the digital asset sector. The Digital Asset Anti-Money Laundering Act (DAAMLA), promoted by Senator Elizabeth Warren, proposes severe restrictions on cryptocurrencies that would represent almost a de facto ban.
Johnsson also emphasizes President Biden’s veto threats against Resolution H.J.Res. 109, which would nullify the guidelines of Staff Accounting Bulletin No. 121 issued by the SEC.
According to Johnsson, the actions of the Biden administration represent a series of regulatory, legislative, and enforcement obstacles that significantly hinder the potential of Bitcoin and cryptocurrencies in the United States.
