Declaring a crackdown? What to make of the DoJ crypto framework release

In the highly charged atmosphere of the final weeks before the presidential election, with high-profile enforcement actions against the people behind crypto derivatives exchange BitMEX and the U.S. government's sweeping anti-monopoly push against Silicon Valley looming in the background, the Cryptocurrency Enforcement Framework seems like part of some larger political and regulatory dynamic.

One reason why even a modest uptick in enforcement activity in the digital asset space can feel like a full-blown clampdown is that U.S. government agencies have so far been rather selective when deciding whether or not to go after unscrupulous crypto actors.

The DoJ's introduction of the Crypto Enforcement Framework could suggest that the tide is turning.

"Different federal agencies mentioned in the report, such as the SEC, CFTC, and FinCEN, have all been steadily increasing their regulatory and enforcement activity in the cryptocurrency space as that space has grown. Much of the report collects and describes the different agencies' actions over the past few years."

It seems unlikely that the release of the present enforcement guidelines has been timed to any particular developments in the cryptocurrency market, as the comprehensive 83-page report has been many months in the making.

The guidance document details the DoJ's priorities and strategies with regard to the maturing cryptocurrency industry, aiming to inform the law enforcement community, market participants and the general public both at home and abroad. Apart from this, parts of the report can be read as a signal of what certain subsets of crypto stakeholders can expect for the future.

"There have been several studies that have shown that significant volumes of terrorist financing, money laundering, and other illicit proceeds are funneled through major, established exchanges. DOJ made clear in its framework that it is aware of this problem and that enforcement of federal criminal laws, including KYC and AML requirements, is part of its framework for addressing it."

While this could spell more regulatory certainty and safer adoption for the crypto industry at large, certain sectors such as blockchain analytics, which specializes in transaction tracing and works closely with law enforcement, will be benefited directly.

Shetret then laid out the five prongs of the new law enforcement strategy: coordinating parallel enforcement actions and interagency partnerships, promoting law enforcement awareness and expertise, cooperation between federal and state authorities, increased international cooperation, and private-sector education and outreach.

At any rate, it would be a good idea for privacy coins and the crypto industry at large to start bracing themselves for both more pointed legislation and tighter enforcement in the near future.