A conversation with Brian Nelson

I think this goes back to some core principles that Treasury has reflected in its rulemaking for a long time. One is to focus on the activity rather than the product and build regulatory obligations based on the activity to meet the risks associated with that type of activity. And certainly this reflects the core of what we do and how we think about regulation. This means that regulation must be risk-based and drive risk-based behavior. So thinking back to the ’80s and the mixer and the fact that they’re both really both, I’m very drawn to bringing out actors. But the important thing about this is that you have mixed entities that don’t do meaningful KYC, how do you manage privacy and anonymity, you don’t have AML/CFT, you don’t have things like: It is designed to precisely manage this tension. So not everyone needs to know who you are dealing with. However, we believe that Americans should be in a position to comply with U.S. law and not have contact with sanctioned individuals, or that U.S. financial institutions should have the ability to avoid engaging in activities that unwittingly support North Korea’s weapons manufacturing. Korea, etc. So ultimately the good news is that we are in balance. I think there is some kind of policy framework that can strike a balance. However, we recognize that technology is evolving rapidly and we must work closely with industry to understand the technology and think through potential new regulators while clearly encompassing the new definition of a financial institution. Virtual assets and virtual assets are lidar, etc. Quite frankly, what we’re doing is based on what we’re learning from the smart people in this room.