The White House’s final regulatory framework for crypto has emerged, with reports contributing to this. The reports provided new insights into how the US government will regulate cryptocurrencies. Accordingly, it is possible that some altcoin projects will suffer due to the US crypto law.
New reports emerge about US cryptocurrency regulation
The US government is grappling with digital asset regulation. In recent months, key members of the Biden government have made some comments. Regulators have announced some sanctions, and some government-based reports have surfaced. These shed light on how the US government plans to regulate cryptocurrencies. Treasury Secretary Janet Yellen has been prominent in digital asset regulation, especially regarding dollar-pegged stablecoins. Yellen was one of the biggest supporters of this invitation.
After Terra’s collapse in May, Yellen and several members of Congress took action to protect US investors. Accordingly, they have committed to preparing a comprehensive stablecoin regulatory framework to assist investors. Last week it released a new bill regulating stablecoins. This bill includes a two-year moratorium on “collateralized stablecoins.” It also requires all potentially non-bank stablecoin companies to register with the Fed.
These altcoins can go to waste
The White House document explains how multiple government agencies will try to oversee the growth of the digital asset space. It also determines how it will focus on purposes ranging from promoting access to financial services to financial failure and effort. According to reports, the enactment of regulation in the US has the potential to harm some altcoins. Below you can find these altcoin projects and how they will be affected.
Tornado Cash (TORN) price crashed after reports
The Treasury Department banned Tornado Cash this year for violating the law. Therefore, this privacy-focused TORN altcoin is the most obvious cryptocurrency that is expected to meet regulatory scrutiny in the future. The privacy project is also becoming a popular avenue for cybercriminals looking to launder stolen digital assets. The US has approved Tornado Cash’s code, counting any random interaction with the protocol as a bug in the states. Tornado Cash responds to foreclosure action today TORN dropped significantly from $30.43 to $5.70 today.
Maker DAO (MKR and DAI) may be negatively impacted in the future
The Maker protocol and the highly collateralized DAI stablecoin are now not included in any random US crypto regulation. However, users assume that this could happen in the not-too-distant future. Rune Christensen, co-founder of MakerDAO, is taking steps because of expectations that the project will attract U.S. attention as it issues a stablecoin. However, the law also requires all non-bank stablecoin issuers to register with the Fed.
It is possible that MakerDAO is not registered as a non-bank stablecoin issuer in the US. If that happens, the price of the protocol’s MKR token will likely drop. DAI could potentially become a restricted cryptocurrency within States. This situation does not seem likely at this time. However, it’s worth considering MakerDAO’s regulatory risk.
Monero (XMR) at risk of being banned
The last cryptocurrency that could be harmed due to US regulation is Monero. Launched in 2014, Monero is the most successful privacy-focused blockchain. The network uses a variety of privacy-preserving features such as ring signatures, zero-knowledge proofs, hidden addresses, and IP address obfuscation methods to ensure privacy and anonymity for all users. Like Tornado Cash, Monero has drawn the ire of regulators in the US for its process obfuscation ability.
In 2020, the Internal Revenue Service began offering a $625,000 cash reward to anyone who could successfully break Monero’s lockdown and expose users’ processes. However, this award, which speaks to the power of Monero’s implied technology, was never claimed. US-based crypto exchanges cannot confirm whether cryptocurrencies were purchased through illegal activities. Therefore, they refuse to accept Monero deposits or open spot markets for XMR. However, these restrictions may increase in the future.