From Skadden 9-21-21
In recent months, the increased focus on cryptocurrency regulation and enforcement at both the federal and state levels demonstrates the digital currency’s place as an established component of the financial landscape. At the same time, the cryptocurrency industry has become more attuned to and engaged with government. Growth in this space appears likely to continue. Below we discuss some of the recent notable legislation, regulation and enforcement developments in this industry.
Federal Government
Legislation
On August 10, 2021, the U.S. Senate passed a $1 trillion bill aimed at increasing infrastructure funding over the next eight years. To help pay for these expenditures, the Senate included a provision imposing reporting requirements on cryptocurrency “brokers,” with estimates that such reporting would allow the Internal Revenue Service to collect an additional $28 billion in tax revenue over 10 years. But the broad definition of broker — any person responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person — sparked significant backlash throughout the cryptocurrency community, resulting in several days of proposals and counterproposals among legislators. While the original definition remained in place, the debate marked the most serious consideration of a cryptocurrency issue by either chamber of Congress.
Regulation
On September 21, 2021, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued an updated advisory about the sanctions risks of facilitating ransomware payments using cryptocurrencies. OFAC’s advisory reminds organizations that it applies a strict liability standard when imposing civil penalties for sanctions violations.
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