Who Regulates Decentralized Crypto Currencies?

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The SEC, New York state and FinCEN are all attempting to establish regulations for decentralized cryptocurrencies, but so far, none have succeeded. These groups are hesitant to regulate these new investments due to the issues above. However, a recent SEC Chairman Gary Gensler report argues that these new assets are “ripe for fraud and scams” and that investors need more regulatory protection.

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The United States financial regulatory agency FinCEN’s proposed regulations could potentially damage cryptocurrency users. The proposal would give the government unprecedented access to the financial information of cryptocurrency users. It could also lead to unintended consequences for certain blockchain technologies. While the proposed regulations are an excellent first step, they also fail to consider the risks that may arise adequately. FinCEN announced its proposal during the holiday season without allowing the public to provide feedback.

In addition, the proposed regulation would affect banks and cryptocurrency exchanges. The new rules would require AML compliance teams to flag more transactions and file more paperwork. Increased detective work would be the most significant burden. Additionally, AML compliance teams will have to monitor for structuring activity, the process by which customers break up large transactions into smaller ones. Also, reporting the names and addresses of customers will pose significant logistical challenges.

The FinCEN proposal has sparked debate. Some organizations, such as the New Civil Liberties Alliance, have publicly commented against it. But others have argued that it is necessary to combat the illicit finance industry. Regardless, FinCEN has defended its proposal. It also believes that the proposed regulations are required to combat illegal finance and will ensure a safe, transparent environment for the cryptocurrency industry. If this rule is adopted, it will likely make the crypto ecosystem even further isolated from the formal exchanges.

Despite the risks associated with decentralized cryptocurrencies, the agencies have found ways to hold these individuals responsible. The SEC has brought multiple enforcement actions, and the DOJ arrested two individuals in connection with a scheme to launder $4.5 billion in stolen cryptocurrency. In addition, FinCEN and the CFTC settled a lawsuit involving BitMEX in 2013 after the exchange’s founders pled guilty to violating the Bank Secrecy Act.

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Although the Biden administration has declared a temporary rulemaking freeze, the Travel Rule NPRM was not. During this time, a FinCEN official will review the NPRM. However, the deadlines for the unhosted wallet NPRM have been revised to 60 days, and no decision has been made yet on whether the Travel Rule will be reopened. In the meantime, the Biden administration has issued updated guidelines on how to regulate decentralized cryptocurrencies.

While the SEC and the Treasury Department have led the crypto regulation effort, other agencies are pursuing similar goals. For instance, the Board of Governors of the Federal Reserve System conducted a series of interagency policy sprints focusing on crypto assets to create a road map for further guidance. In the meantime, companies should be vigilant in ensuring that their operations remain compliant.


If you’re unfamiliar with the SEC’s role in regulating decentralized cryptocurrencies, you may be surprised to learn that it’s not as much a regulatory agency as a regulator. Even though they’ve taken 80 enforcement actions against crypto assets, they still don’t have any rules to regulate the entire industry. But the SEC is making progress, and recent developments show that this message is starting to catch on.

The SEC has long talked about regulating crypto assets and blockchain and has often proposed amendments to its 25-year-old “Regulation Alternative Trading System” (Reg ATS). They offered an amendment to Reg ATS in 2020 but never finalized it. Cryptocurrency executives and investors don’t like the latest proposal from the SEC. But they aren’t alone. They are urging the SEC to change its stance.

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The SEC should regulate digital assets under securities laws. This would give it the power to address abuses in the industry and prevent fraud. Regulations include:

  • Information disclosure requirements.
  • Accounting rules.
  • Government-regulated data sources.
  • Rules against manipulation and deception.

There would also be market access and insurance requirements through the Securities Investor Protection Corporation. In addition, the SEC would also have the authority to regulate digital assets as securities, which would provide investors with legal protection.

Ripple faces another legal battle. The SEC says Ripple’s $1.4 billion sales of XRP constituted an illegal securities offering. The lawsuit alleges Ripple violated securities laws by offering XRP in an unregistered digital asset securities offering. XRP is the sixth-most valuable cryptocurrency in the world, according to Forbes. If proven true, this could set the stage for a bellwether court battle for cryptocurrency.

The SEC has also started targeting exchanges and lenders of crypto assets. Recently, BlockFi was hit with its first enforcement action by the SEC after an account holder sued the company for failing to properly register interest accounts as securities. Those who had invested in BlockFi were forced to make monthly payments for interest derived from its lending activities. As a result, the SEC wants to regulate all companies offering Defi.

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The SEC is leading the charge for more regulatory oversight of crypto platforms. Many of these platforms are in the process of selling securities, and they must provide investors with extensive disclosures about the risks associated with the investment. Since cryptocurrencies are not yet widely used as investment vehicles, the SEC’s stance toward decentralized cryptocurrencies indicates growing regulatory clarity across other industries. While this does not diminish the risk associated with these assets, it does suggest that the SEC’s increasingly favorable attitude toward the sector may accelerate the arrival of institutional investors.

While some argue that the SEC’s efforts have been too aggressive, it has been clear about the relationship between technology and securities laws. The agency has been very upfront about its enforcement priorities, while critics claim that the SEC is too timid. Whether or not they are doing a better job of regulation is the question. The SEC is well-positioned to make such a decision, but it is still early in the process.

New York State

BitLicense, the state regulation of decentralized cryptocurrency transactions, negatively affects companies and consumers in New York. It significantly restricts the trading options of consumers in the state, limiting them to only money transmitters registered in the state. The BitLicense has only been in effect for six years, and so far, only twenty organizations have been issued a license. Despite this, no other state has taken the same steps to regulate cryptocurrency transactions, limiting consumer choice.

The NYDFS’s BitLicense is vital to the decentralized crypto regulatory framework. It covers a range of activities involving crypto, including transmitting it, buying and selling it as a customer business, and issuing and exchanging it. BitLicense has also stiffened grassroots innovation in the city by requiring companies that use this capital to comply with the state’s regulations.

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The bill also outlines a framework for regulating decentralized cryptocurrencies, allowing financial institutions to serve as custodians for these digital assets. It also defines a virtual currency as property, allowing banks to accept and hold it as a legal tender in the state. In addition, the bill requires banks to have a department of trust approved by the state’s Corporation Commission. A joint subcommittee was formed to explore the legality of decentralized cryptocurrencies in New York.

The proposed BitLicense aims to protect consumers and prevent illicit activities by crypto companies. However, the bill goes beyond the initial intent of the BitLicense to ensnare ne’er-do-wells in the crypto industry. The legislation acts as a pesticide for the crypto industry, killing off new life and shoots. Only giants will survive this legislation.

In addition to establishing BitLicense, the NYDFS also plans to regulate the underlying blockchain technology. As the financial center of the United States, NYDFS oversees all financial services and products and has made it mandatory for businesses involved in crypto in New York to acquire this license. The Department’s draft legislation would not ban crypto ownership. Still, it would add capital requirements to decentralized wallet creators and bolster anti-money laundering requirements for virtual asset service providers and anonymous accounts.

Moreover, the regulators are focusing on stablecoins since the lack of transparency is a crucial problem for the industry. While some crypto firms do operate under BitLicense, some are not. This new guidance is relevant for companies holding a BitLicense, a business license for cryptocurrency in New York state. It also aims to clarify the risks associated with algorithmic stablecoins.

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The bill also requires the division of finance to contract with a third party for the acceptance of digital user assets. The division will be authorized to impose civil penalties on violators. Furthermore, registrants must develop and maintain policies and procedures that protect the consumer. However, it will be up to the Department to determine the appropriate standards. And the bill is far from perfect. It will be interesting to see how the laws will evolve.

Bitcoin is the fastest decentralized blockchain, handling about seven transactions per second (TPS). However, there are significant limitations to its performance. Bitcoin transactions take 60 minutes to confirm, and the confirmation time is extended. Ethereum, on the other hand, only takes about 25 TPS and only six minutes to ensure a transaction. While users can handle these issues for security reasons, long transaction times keep the crypto industry small, and big corporations have yet to enter this market. However, there is an emerging method for increasing performance. The Lightning Network is bringing Bitcoin transaction time under a minute or up to 10,000 TPS. The technology is still in its beta stage, and the timeframe for that improvement is unclear.


The Stellar blockchain is a multi-currency network that allows people to store and move money. Originally designed to promote financial inclusion, it has now changed its priorities to help financial firms connect through blockchain technology. The network has a hard limit for how many transactions can occur on each ledger, set at 1,000 per second. The number of transactions per second is calculated based on the fact that each register is closed once every five seconds.

Unlike other blockchains, Stellar transactions are conducted through a decentralized network. The process of sending money to an anchor, updating credit balances, and exchanging currency occur on multiple nodes within seconds. As a result, the network fees are meager: 600,000th of a cent per transaction. However, Stellar is unique among other crypto projects because of its noble goal of creating a decentralized, inclusive digital economy. It plans to connect people worldwide to low-cost financial services, fight poverty, and maximize individual potential.

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The development of Stellar’s decentralized blockchain technology has led to a new generation of decentralized payment systems. By connecting global financial infrastructure, it facilitates faster and cheaper transactions. This new system has facilitated cross-border money transfers, international payments, and frictionless micropayment processing. Sixty-nine percent of financial firms, including Stellar, are currently testing new blockchain technologies. If you’ve wondered what decentralized blockchains can do for you, read on.

While a decentralized blockchain may sound daunting, it can be a great way to participate in the growing crypto industry. Stellar’s success is the result of many successful growth spurts. It managed to house nearly three million accounts in just a year. It has also created a large ecosystem of partners and a digital currency known as Lumen. Lumens are used as transaction fees. This makes Stellar valuable money in many markets.


Known as “Cardano” in the crypto sphere, this project is built on a proof-of-stake system. It is used for decentralized finance and enables smart contracts, which automatically execute when certain conditions are met. It also allows the creation of tokens and the monitoring of digital assets. In addition to its potential for decentralized finance, Cardano is faster than Ethereum, the most popular and widely used blockchain today.

The technology behind Cardano was developed over two years (2015-17) and was created by peer-reviewed standards. The technology is designed to solve some problems with other popular cryptocurrencies like Ethereum and Bitcoin. Its ecosystem is still very new but expected to gain popularity over time. It is a proof-of-stake system, meaning no single user can control every aspect of the network, resulting in cheap transactions.

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Unlike many other cryptocurrencies, Cardano has no underlying assets or cash flow. Its value fluctuates dramatically, and investors should only invest in it if they are sure they can handle the volatility. As with any investment, you should research to determine the right strategy for you. Even if you’re already familiar with cryptocurrency, it may be risky. As with any investment, do not invest money you cannot afford to lose. In addition, remember that past performance is not a guarantee of future price appreciation.

While Ethereum is the most popular decentralized blockchain, Cardano has been the fastest as of late. Its speed is unmatched in the market, and the price of the Cardano token is currently the third-highest among all cryptocurrencies. The company plans to boost the cost of the Cardano token to $5 by 2021. This is not a small feat, as it could be the fastest decentralized blockchain.


Flow is the fastest decentralized blockchain, with deterministic finality achieved in seconds. As the blockchain’s nodes decide which block a transaction belongs to, user agents can execute the transaction locally and get feedback almost instantly. Its network design also facilitates the efficient distribution of transaction workload across nodes. Its development team is working with several partners to improve its performance.

Flow is a new platform for decentralized applications. Its creators took the issues with Ethereum and developed a new blockchain and programming language based on those issues. It has an abundance of documentation and is constantly looking to simplify development. It’s also the most popular blockchain for developers, with over 200,000 active users. Flow is currently the fastest decentralized blockchain, and many people are excited about its potential.

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Flow is also gaining popularity in the world of gaming. Its developers recently announced that it collaborates with the UFC to create cryptocurrency digital assets and a companion game. It also recently received a significant investment from Dapper Labs, a venture capital firm. It has also received funding from prominent players such as Michael Jordan, Andre Iguodala, Kyle Lowry, Spencer Dinwiddie, and Josh Hart.

Flow is an example of a fast decentralized blockchain that uses sharding to facilitate transaction verification. Each shard represents a different blockchain; thousands of chips can be added to increase TPS. The network also enables millions of short-term positions to be created. Flow is an excellent example of horizontal scaling, as it can scale to support millions of transactions per second.


Litecoin is one of the fastest decentralized blockchains available today, with a block generation time of just two and a half minutes, making it significantly faster than Bitcoin. Unlike Bitcoin, the Litecoin network does not require a central authority to maintain the ledger, meaning transactions can be completed faster, and merchants do not have to wait an hour for six confirmations to process a transaction. Instead, the network will adjust the difficulty to mine more quickly, reducing the time it takes to process a transaction.

Litecoin uses the Scrypt hashing algorithm to process transactions. This algorithm is more memory-intensive than SHA-256 and is slower. It was initially designed to discourage GPUs and ASICs, making the Litecoin network more accessible to individual users. However, it was modified in 2011 by the Tenebrix project to work with regular CPUs. This change made it possible for Scrypt to be used on ordinary computers.

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The main difference between Bitcoin and Litecoin is the algorithm used to process transactions. Litecoin was designed to discourage enterprise-sized miners from participating, but this did not work. The miners quickly learned to adapt and developed specialized machines. Litecoin, like Bitcoin, also supports private transactions. Unlike Bitcoin, Litecoin’s algorithm is designed to withstand both network congestion and mining arms races.

Bitcoin and Litecoin both have the potential for upgrades. The first to adopt these upgrades are typically Litecoin, with Bitcoin lagging. This has the advantage of reducing the damage caused by significant mistakes. Historically, the market capitalization of Litecoin has far outpaced that of its counterpart. Litecoin adopted even SegWit in December 2017 after no critical issues were reported.


Solana is a cryptocurrency that uses a combination of PoS and PoH protocols to determine when a transaction is complete. Because of this, Solana claims to be faster than its competitors while maintaining a high level of security. Solana’s native coin, SOL, is available on the popular cryptocurrency exchange Coinbase. This cryptocurrency has several advantages over its competition, and its developers hope to compete with giants like Visa and Mastercard.

Solana has a remarkable TPS of 60,000. This incredible number surpasses that of other decentralized blockchains like Ethereum and Cardano. It also outperforms the 1,700 TPS that Visa currently supports. Solana’s ecosystem has expanded beyond the financial markets, with developments in crypto wallets and Defi. Now, Solana is working on making decentralized oracles, gaming, and NFTs.

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The speed of Solana transactions is also another benefit. Its hybrid proof-of-stake and proof-of-history technology have allowed it to process transactions faster than Ethereum. Moreover, it offers lower transaction fees, making it an attractive alternative to Ethereum. Despite its speed and low prices, it still has a long way to go, and many people have already invested in it.

Another advantage of Solana is its low storage cost. Solana’s Proof of History algorithm makes it the fastest decentralized blockchain currently. The system relies on nodes to vote on transactions and blocks. Then, the network leader tallies the votes and signs off the blocks. While this system has advantages, some people have expressed concerns about its voting process. Therefore, it is essential to understand its limitations before investing in Solana.

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