Where US Regulators Stand on Cryptocurrency
Cryptography refers to acts and study of methods of securing communication from access by third parties. It is a method of developing protocols that prevent third parties and the public from reading certain messages. Various elements in the security of information like data integrity, confidentiality and authentication are key in cryptography. Cryptography is applied in various fields to secure information and prevent harm, particularly in financial transactions. Financial cryptography is the application of cryptography where interception of the message can lead to financial losses. The use of cryptography in financial transactions is a new advancement. Previously cryptography was exclusively applied for diplomatic and military purposes.
How U.S. regulators regulate Cryptocurrency In the U.S, there is a huge oversight of financial cryptography by the regulator. The major regulators include SEC, Fincen, the Federal Reserve, the CFTC and the IRS. The securities and exchange common (SEC) has the responsibility of overseeing crypto assets that are considered to be security. Various agencies have tried to get security approval for various securities but have been rejected. The commodity futures commission (CFTC) has responsibility for crypto-asset derivatives and commodities. Various crypto-assets derivatives and companies have approved by the agency. However, the Federal Reserve has indicated that it was not pursued actively digital currency. For the Federal Reserve, digital currency raises significant inquiries that needed to be resolved carefully.
The U.S. Securities and Exchange Commission (SEC) has published fresh regulatory guidance for token issuers, nearly half a year in the making (Bitcoin). The guidance focuses on tokens and outlines how and when these cryptocurrencies may fall under a securities classification according to the document. The guidance includes examples of both networks and tokens that fall under securities laws, as well as a project which does not.
The financial crimes enforcement network (FinCEN) indicate that AML laws have an application to people obtaining, exchanging, creating, distributing, transmitting, and accepting virtual currencies. It means that people who deal with virtual currencies are subject to money service business reporting, registration, and keeping records. The Internal revenue service has indicated that the handling of virtual currencies has a tax impact that can lead to tax liability. In general, the U.S regulator aims at regulation crypto assets. Regulation of those assets will have a huge impact on the long-run growth of the U.S economy.
Application of encrypted messages The work of DR. Davide Chaum made the cryptography community think about the application of encrypted messages in financial instruments. In the initial stages of its development, it applied the guide of cryptography, and only simple ideas were used. Methods of account money by SSL like e-gold and PayPal were moderately successful, but more innovative methods like blind token money were applied.
Financial cryptography is also applied in the creation of new types of money. Various auction protocols and proof of work are applied in financial cryptography. Hash cash is a proof of work system applied to prevent email spam and denial of service attacks. It is also a kind of financial cryptography that is applied to the limitation of spam. In recent time Hash cash have been applied in Bitcoin and other types of cryptocurrencies. It has been observed that financial cryptography has a huge application.
Reference Where US Regulators Stand on Cryptocurrency. (2019, October 16). Retrieved from Bitcoin: https://news.bitcoin.com/where-us-regulators-stand-on-crypto-assets/
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