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Coin Center Warns US Crypto Policies Could Hinder Innovation Despite Trump Win

by Abimbola Adu
Nov 23, 2024 - 10:10 pm
in Blockchain
James Walkinshaw speaking after winning Virginia primary, backed by crypto PAC funding

Non-profit advocacy group Coin Center has raised red flags on US crypto policies, cautioning that they could stifle innovation despite the generally pro-crypto bent of the incoming Trump administration.

Three Major Threats to US Crypto Innovation

In a blog post last Nov. 21, Coin Center Research Director Van Valkenburgh discussed three key significant risks threatening US crypto developers and users into 2025.

Unconstitutional Reporting Requirements

Section 6050I of the US tax code prescribes warrantless reporting requirements for crypto transactions above $10,000. Coin Center has made the case that the requirement violates constitutional rights, especially considering its invasive surveillance consequence.

Sanctions on Tornado Cash and Developers

Legal actions filed against Tornado Cash and its developers, including Roman Storm, remain another critical challenge. Coin Center warns that the criminal charges against the developers for the facilitation of non-custodial services may turn out to be a dangerous precedent for the broader crypto ecosystem.

Severe Anti-Money Laundering Policies

It is likely that overzealous AML regulations and sanctions could continue to deter innovation, even under Trump’s administration. Valkenburgh specifically highlighted the threats services like Samourai Wallet face, noting that such policies create a chilling effect for developers.

Trump’s Pro-Crypto Stance: A Double-Edged Sword

While Trump’s administration is likely to follow a far more crypto-friendly approach—possibly freezing or overturning the most controversial SEC regulations—Coin Center warns entrenched institutional policies may not budge. The Department of Justice, or DOJ, for example, often keeps to itself and may continue its set of prosecutions.

Valkenburgh said, “The DOJ rightly guards its political independence, making it unlikely to abandon prosecutions simply due to a change in administration”.

Despite optimism for Trump’s potential appointees at the SEC and Treasury, concerns remain that sanctions and surveillance laws will still stifle innovation.

The Urgent Need for Reform

Coin Center stressed that current policies disproportionately harm legitimate crypto users and developers without effectively addressing criminal activity. Surveillance-focused regulations, like those under Section 6050I, fail to deter illicit actors while discouraging innovation and driving entrepreneurs out of the US.

He warned that the failure of meaningful changes to these policies puts the US at risk of losing its competitive advantage in the global crypto landscape. He added that innovation might move on to jurisdictions that had more supportive regulatory frameworks.

As the crypto community awaits the next administration’s approach, Coin Center has remained focused on advocating for balanced policy that enables innovation to thrive while addressing legitimate concerns.

Tags: DonaldTrumpRegulationSECWeb3
Abimbola Adu

Abimbola Adu

Abimbola Adu is a crypto content writer with a background in English studies. She is keen on enlightening others about cryptocurrency and blockchains. She enjoys writing poems and spending time with family.

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