After a year of virtual conferencing, DEF Con 29 returned to Las Vegas to an audience of over 10,000 with a message of resilience, and the theme of 2021’s return to in-person congregations: “You Can’t Stop the Signal”.
As members of the blockchain community, it’s a message we at AnChain.AI resonate with. After all, cryptocurrency and virtual assets continue to thrive despite the naysayers, ebbs and flows in the market, and, until recently, lack of institutional support. Despite all of that, virtual assets have become a trillion dollar market, which presents a fresh conundrum.
Considering the 75 cryptocurrency enforcement actions brought by the SEC in the first half of 2021 alone, not long.
AnChain.AI advisors Daniel Garrie, co-founder of Law & Forensics LLC, and David Cass, VP of Cyber & IT Risk at the Federal Reserve Bank, shed light on the complex mechanisms of regulating cryptocurrency.
Said Daniel Garrie on the matter, “The regulatory landscape [for cryptocurrency] is complicated. It’s an alphabet city of people who think they have authority, and the truth is they all have authority…there’s no clear ‘big boss’ so to speak.”
At the moment there is no central authority heading the regulatory charge with regards to virtual assets. The U.S. Treasury, for example, classifies cryptocurrency as virtual decentralized currency, whereas the IRS defines it as property for the purposes of calculating tax liability. However, while each agency carries out its own actions with its own objectives, the overarching goals of Public Policy remain the same:
- Ensure Financial Stability
- Protect Investors Against Fraud and Other Threats
- Ensure the Integrity of Markets
- Guarding Against Illicit Activities
None of these goals can be adequately achieved without overcoming the difficulties presented by the pseudonymity endemic to the virtual asset economy. An effective regulatory response requires a collaboration between legal experts and authorities and technology providers, each fluent in the technologies behind virtual assets.
“When it comes to smart contracts and DeFi, we have to address the question of whether the code that is written accurately replicates the contract it is intended to replace.” Said David Cass of the difficulties presented by the growing smart contract ecosystem. “You need attorneys who understand code, you need coders that really understand the business aspects of what’s going on so you can get things properly aligned. Otherwise things can be implemented and clauses can come up in the code that move money before the conditions have been properly met.”
While the virtual asset space holds a lot of potential to do a lot of good, there is also the chance for bad actors to really take advantage of people who are entering the cryptocurrency market for the first time. To ensure the safety and long-term success of this exciting new technology, it is absolutely essential for all market participants to equip themselves with the appropriate tools, from wallet intelligence to forensic analysis to smart contract monitoring.
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