1/ As the press reported, the US Treasury said:

yesterday, that :"crypto poses a threat to government"

last week, that "algorithmically-pegged stablecoin issuers are MSBs."

But did any of this really happen? I don't think so. Here's a quick take.

2/ Let's start with stablecoins. We already knew FinCEN thinks tokenized fiat issuers are MSBs. The 2013 guidance said as much, even before the advent of modern dollar-backed coins like USDT and USDC.

3/ Anyone who can both *issue* (put into circulation) and *redeem* (remove from circulation) a virtual currency is an MSB, according to FinCEN.

4/But remember, this isn't the law; it's just FinCEN's interpretation of the law. The law itself applies only to persons who: accept value + transmit value + do so as a business.

5/ No court has yet done so yet, but one would probably side with FinCEN on tokenized fiat issuers. They're businesses. At minimum, a judge would likely be convinced they accept fiat and transmit crypto.

6/ I don't think this necessarily applies to algo-pegged coins like @MakerDAO . I think they're different in important ways. It's not just the letter of the law that doesn't apply - it's the purposes and justifications, too.

7/ The MSB laws were originally intended to capture remittance companies who could hide flows of funds from regulators and who had discretionary control over how those funds flowed. Without the BSA requirements, these activities would be opaque to law enforcement.

8/ Little, if any, of this applies to algo-pegged stablecoins. Flows occur publicly and on-chain. There's no third party in possession of secret information to aid in investigations. Arguably, there's not even a "business" aside from development activity.

9/ Granted, FinCEN is a Big Data org and it needs its data. But for algo-pegged coins, it can get that data from the blockchain just as easily as from any third party.

10/ The justification for characterizing its developers as MSBs is to require the collection new data that they never had.

Maybe you think this would be a good thing! But isn't that a normative political belief?

That's the domain of congress and laws, not regulators and rules

11/ When Blanco said "It does not matter if the stablecoin is backed by a currency, a commodity, or even an algorithm", some saw it as yet another justification to dispense with nuance, disavow rigor, and adopt a "walks like a duck" approach to legal analysis

12/ "Well of course these guys are all MSBs, just like all these token sales create securities!" Man let me tell you, this bums me out for many reasons, but mostly because it's intellectually lazy.

13/ FinCEN is quite far from intellectually lazy, and so are federal judges. So what really happened?

Blanco made an off-the-cuff statement that was about as high-level and generalized as could be. Of course the laws apply to algo-pegged coins. The important question is "how?"

14/ And did the Deputy Secretary really say yesterday that crypto poses a threat to government?

Of course not. He never used the word "threat".

15/ In fact, Muzinich gave quite a thoughtful summary of the history of private currencies! He talked about how they didn't work, created unnecessary risk, and why we moved to a centralized model. You can read it in full here: https://home.treasury.gov/news/press-releases/sm835

16/ He said "Digital currencies at scale raise not only concrete questions about money laundering, monetary policy, and other topics, but also very abstract questions about self-government."

I must say: I agree.

17/ The strident tone reported by the press and "rule of law" attorneys? Well it was simply not there. There is *a lot* of work to do on crypto policy, particularly now that Libra has amplified scrutiny over our space. Let's try to see the challenges as they are ...and meet them.