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how American regulators extract benefit from “friendship” with crypto companies – an overview
US Regulators Engage Crypto Industry Representatives To Work
American regulators are ready to work with crypto companies on a paid basis
Many market representatives willingly cooperate with regulators
The digital asset market continues to evolve and penetrate the traditional financial system. Against the background of the popularity of the new financial instrument, the authorities are faced with the need to look for solutions to control the crypto space. Many regulators did not reinvent the wheel and turned to industry representatives for help.
BeInCrypto’s editors decided to figure out how national agencies build relationships with digital asset market participants.
I understood it myself – help the state
The cryptocurrency market is built around the ideas of the formation of a decentralized economy. Central banks and other regulators do not fit into it. Despite this, many participants in the crypto space, as it turned out, do not mind establishing mutually beneficial cooperation with representatives of the opposite camp. An example of this was the deal of the popular digital asset exchange Coinbase with the US Secret Service.
The CEO of the trading platform Brian Armstrong has agreed to sell Coinbase Analytics, a tool for tracking crypto transactions, to the American regulator. Participants in the digital asset market criticized the decision, but the developer tried to explain it as an attempt to recoup the creation of the program.
It’s expensive to build this capability, and we want to recoup costs. There is an existing market for blockchain analytics software, so we sell it to a handful of folks as well. It also helps us build relationships with law enforcement which is important to growing crypto.
– Brian Armstrong (@brian_armstrong) July 12, 2020
Notably, regulators got Coinbase Analytics for less than $ 50K a year. The parties signed a contract for 4 years. The Block analyst Larry Cermak drew attention to the fact that such a valuable tool went to the Secret Service at a ridiculous price. He is confident Coinbase used the deal to improve relations with regulators ahead of a possible initial public offering (IPO).
The recouping money argument… The government agencies said themselves that “this is the least expensive tool on the market and has the most features for the money.” Coinbase is undercutting competitors ’prices by a lot. The 4Y contract to Secret Service is only worth $ 184k.
– Larry Cermak (@lawmaster) July 12, 2020
Against the background of the positive experience of the US Secret Service, the American Securities and Exchange Commission (SEC) also decided to take advantage of the knowledge of the crypto community. Representatives of the regulator published an announcement about the search for a contractor who would provide them with tools for monitoring smart contracts.
Previously, the SEC team has already entered into agreements on joint work with participants in the digital asset market. For example, experts from the analytics solutions provider CipherTrace provided the Commission with tools to track transactions on the blockchain of the popular digital asset exchange Binance..
Read also: CipherTrace Experts Find Out That Leading US Banks Are Involved in Cryptocurrency Laundering
In parallel, the CipherTrace team collaborates with representatives of the cryptoindustry. The company’s relationship with regulators did not affect its position in the industry.
The Internal Revenue Service (IRS), in turn, decided to keep up with colleagues. Representatives of the regulator also want to buy tools for tracking anonymous transactions.
Perhaps, in the future, the positive experience of joint work of agencies with participants in the digital asset market will become a reason for concluding new partnership agreements..
It is noteworthy that American regulators are interested not only in technical solutions for controlling cryptocurrencies, but also in the possibilities of creating a digital version of the dollar. Learn more about the crypto transformation of the US national currency from our material.
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