The core principles that the Treasury has reflected on for a long time in its rulemaking focus on the activity rather than the product. Regulatory obligations are built based on the risk associated with the type of activity, emphasizing a risk-based approach to regulations. Entities like mixers in the 80s are attractive to illicit actors, highlighting the importance of managing privacy versus anonymity. It is crucial for entities not doing meaningful KYC or AML/CFT to be able to follow U.S. laws and avoid engaging with sanctioned individuals or supporting illegal activities unknowingly. The good news is that there is a balanced policy framework in place, but it is important to stay informed about rapidly developing technology and engage with industry experts to understand and potentially update regulatory authorities and definitions to cover virtual assets effectively.
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