The United States Ministry of Justice has brought an essential clarity to the limits of the application of the law, reported a de -escalation of prosecution and opened the door to a more foreseeable environment by revising its approach to the application of digital assets.
In an announcement of paradigm transfer, the doj has moved away from its previous regulatory practice compared, declaring that it is not a “regulator of digital assets”.
Legal advisers from the digital asset industry should applaud this sea change while warning customers to keep their guard, to look with whom they do business and to follow how the regulations change.
Strategic pivot
The MJ said that it would favor cases that will cause damage to investors (embezzlement, carpet prints, investment scams) and national security threats (terrorism funding, cartel activities, drug trafficking). This new priority calls on legal advisers to modify how they advise customers.
First, if a customer faces an ongoing survey, helps to find “inconsistencies” to close the action. The DoJ said that current surveys that are “incoherent” with its new discreet priorities should be closed. Advisers should take the initiative to close the cases if the prosecutors do not immediately do so.
Secondly, if a customer does not face an underlying survey, helps to identify areas where financial loss can occur to customer investors and consumers in order to encourage stages to prevent such damage. Legal advisers who experience application measures as well as the activities and the internal structure of a customer are well placed to determine the types of financial damage that a customer company can cause.
Customers can then allocate resources to improve their business structure and their security measures to combat vulnerabilities and prevent concrete damage to investors and customers.
Third, advisers to customers to strengthen your customer’s knowledge procedures to monitor illegal activities. Although the Doj has ended the regulations compared to the memo, it will continue to continue business to respond to national security threats. It is therefore essential to build and improve KYC procedures and make reasonable diligence of customers on a continuous basis.
Taking proactive measures in this regard will help your customer establish confidence with prosecutors and regulators.
Finally, keep an eye on the developing regulatory landscape to help customers avoid a deliberate violation of regulations. The MJ’s change in policy does not mean the end of the regulation because the Securities and Exchange Commission and the Commodity Futures Trading Commission will continue their role as regulators.
In addition, the memo leaves room for prosecutors to charge regulatory violations when the defendant “violated such a voluntarily requirement”.
The good news is that the industry finds more regulatory clarity. The SEC clarified its point of view according to which certain stablescoins and crypto extraction activities do not imply the offer and sale of titles. As the regulatory landscape changes, legal advisers should closely monitor developments to help customers proceed in addition to confidence.
Proactive conformity
Even with the change in Doj policy, conformity remains critical. Proactive compliance will help monitor investor damage and national security threats that customer activities can cause, which further reduces exposure to application.
In addition, proactive compliance files will provide proof of efforts in good faith and will strengthen the client’s position in any potential survey or application action.
As such, legal advice should advise their customers to continue building and maintaining an effective compliance system, in particular:
Improved silver anti-flary frames. Establish and update AML executives adapted to the company’s products, services and customers. Screening of the sanctions lists must be frequent and automated.
Improvement of fraud and prevention detection systems. Implement and strengthen security guarantees to detect scams, carpet titles and scrutiny. Companies should be proactive in monitoring phishing and identity fraud – common tools in crimes related to crypto.
Climbing and clear relationship mechanisms. Designate qualified professionals to the compliance team and make sure they are authorized to report suspicious activities to the network for applying financial crimes and other competent authorities. Internal training should strengthen a culture of compliance at all levels.
Proactive compliance will help strengthen confidence with prosecutors, regulators, investors and customers in a way that helps customer activities in the long term. Help your customer reassess their risks by considering the MEMO of the DoJ and advising it with risk -based compliance programs that effectively achieve their objectives.
The Doj’s change of policy creates new impetus for the digital asset industry. It will encourage more innovation and developments because the leaders of the industry obtain a certain breathing room with an exposure to the application of laws.
In this changing and regulatory landscape, the role of legal advisers is more important than ever. And legal advisers who closely monitor developments can guide customers to develop their business while effectively complying with laws and regulations.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.
Author information
Jeonghoon Ha is the founder of Ha Law PLLC, a law firm specializing in blockchain and finance law.
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