The U.S. Treasury has officially repealed the regulation requiring decentralized cryptocurrency exchanges to report customer transactions.
This decision, passed by the U.S. Congress and signed by President Trump, faced much backlash from professionals due to the automated and complex nature of decentralized exchange systems.
MAIN CONTENT
The U.S. Treasury repeals the reporting regulation for decentralized cryptocurrency exchanges.
Congress and President Trump had previously enacted this regulation in early the year.
The cryptocurrency community assessed the regulation as incompatible with the automated nature of decentralized exchanges.
How did the U.S. Treasury repeal the reporting regulation for decentralized cryptocurrency exchanges?
According to Bloomberg on July 10, the U.S. Treasury officially announced the repeal of a regulation requiring decentralized cryptocurrency exchanges to report customer transactions. This regulation was initially signed into effect in April 2020 under President Trump and caused much controversy in the industry.
The decision was made to better align with the technical operational realities of decentralized exchanges, which operate automatically through Smart Contract algorithms, making compliance with traditional reporting regulations very difficult.
Why is the reporting regulation opposed by the cryptocurrency community?
Since its announcement, the regulation requiring decentralized cryptocurrency platforms to report detailed customer transactions faced strong resistance from industry experts and developers. They argued that DEXs operate completely automatically, with no manual department or direct contact with users to collect or provide data.
Applying reporting regulations similar to traditional financial institutions is unfeasible with the decentralized model.
John Lee, CTO of a major DEX, 2024
This feedback demonstrates a deep understanding of the technical operations of Blockchain and DApps, particularly the independent functioning of Smart Contracts, which complicates the process of control and reporting.
How did the regulation affect the cryptocurrency market before it was repealed?
The regulation passed by the U.S. Congress put significant pressure on decentralized exchanges to comply with reporting requirements, causing many projects to delay their development progress due to the need to restructure their systems. According to a report by market analysts at ChainData in 2023, exchanges forced to establish reporting mechanisms took an average of 6 months and incurred costs of up to $5 million per project.
The repeal of this regulation is seen as a significant step towards maintaining the free development and innovation of the cryptocurrency ecosystem in the United States.
What is the significance of the repeal of the regulation for the future of DeFi and Blockchain in the United States?
The Treasury's withdrawal of the regulation shows thoughtful consideration in state management, while facilitating sustainable development for DeFi platforms without being constrained by inappropriate administrative requirements.
This decision reflects the growing awareness of the technical complexities of Blockchain, emphasizing the need for flexible and adaptive management approaches.
Sarah Mitchell, Blockchain policy expert, 6/2024
This action plays a crucial role in establishing a transparent and reputable legal environment, contributing to the continued trust of investors and cryptocurrency developers in the long-term potential of the industry.
What are some examples of the impact of this regulation on cryptocurrency exchanges?
Before the regulation was repealed, several major DEXs in the U.S. faced intense pressure to build new reporting systems. For example, one of the top 10 decentralized exchanges in the world had to temporarily halt the expansion of new features and increased operational costs by over 20% compared to before.
The difficulty in compliance has led many DeFi projects to shift operations to markets with more flexible regulatory frameworks, gradually reducing competition in the United States.
How does the operation of decentralized exchanges make reporting difficult?
Decentralized exchanges based on Smart Contracts aim to automate the entire trading process, from order placement to order matching without the need for intermediaries or personnel. This makes tracking, collecting, and aggregating user information for reporting unfeasible.
The expectation of comprehensive reporting conflicts with the decentralized structure, causing technical and legal conflicts. Therefore, from a professional perspective, the Treasury's repeal of the regulation is a suitable move to harmonize technology and regulation.
Frequently Asked Questions
1. Does the repeal of the regulation negatively affect financial security? No, the repeal allows decentralized exchanges to operate more efficiently while still designing appropriate legal control mechanisms tailored to technical specifics. 2. How does this regulation affect cryptocurrency users? Users benefit from exchanges maintaining freedom, transparency, and safety in transactions without being restricted by inappropriate regulations. 3. Is there a possibility that similar regulations will be reintroduced? Possibly, but it will be constructed more appropriately to the technical specifics of Blockchain and decentralized processes to ensure feasibility and effectiveness. 4. How are decentralized exchanges in the U.S. currently complying with regulations? They are implementing security measures and complying with existing laws while coordinating with authorities to develop suitable solutions. 5. Does this decision impact regulatory agencies elsewhere in the world? The U.S. withdrawal of the regulation is seen as a signal for other countries to consider creating innovative but feasible cryptocurrency policies.
Source: https://tintucbitcoin.com/my-bai-bo-quy-dinh-bao-cao-san-tien-dien-tu/
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