Crypto Regulation Experts Debate State vs. Federal Regulation in the Blockchain Era

Three cryptocurrency experts expressed diverging views towards United States crypto regulation at a panel during the Massachusetts Institute of Technology's Business of Blockchain event on May 2.

Wyoming Blockchain Coalition president Caitlin Long argued that digital assets are property and thus should be regulated at the state level, with the approach that "States control property law, states control commercial law. Feds control securities law." She further praised Wyoming's diligence in legally clarifying these terms as applied to cryptocurrency.

According to him, some states underprotect while others overprotect.

"You can get a money transmission license in the state of Alabama for a $5,000 bond. So a company that's handling potentially millions of dollars for Alabamans is secured, the custodial risk is hedged against a $5,000 bond."

"One, I think that we do need the investor protection at the crypto exchanges, and two, on the money-laundering side, right now the crypto exchanges are required to register at any state they're transmitting over some de minimis amount and that means in 50-plus jurisdictions".

When Gensler suggested that crypto exchanges should comply with the Bank Secrecy Act, Long answered that she expects that act to be struck down the next time it is challenged, citing the miniscule conviction rate that it has produced.

Long's home state of Wyoming traditionally employs low-tax, low-regulation legislation.

In January, the state passed two new house bills aimed at fostering a regulatory environment conducive to cryptocurrency and blockchain innovation.

In early April, two members of the U.S. House of Representatives reintroduced the Token Taxonomy Act.

The act contains a preemption provision that would supercede state regulations.