US Senate Discusses New Rules for Cryptocurrencies
On Tuesday, the US Senate held a discussion entitled “Virtual Currencies: The Oversight Role of the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission”.
Regulators and officials have come to the conclusion that they may need to impose new regulations for cryptocurrencies which are a risks that are yet unrecognized by the investing community.
Bitcoin and other virtual currencies have been in high demand in recent weeks, seeing a rise in their prices and also in questionable investment scams that have attracted the attention of the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), the major agencies that supervise US financial markets.
SEC chairman Jay Clayton said that some online platforms that operate as „exchanges” which trade cryptocurrencies can be deceitful.
“I’m not satisfied when I see people thinking that trading cryptocurrencies have the same protections as stock markets,” said Mr Clayton as the hearing.
He offered to collaborate with Congress and other regulators to determine whether more federal supervision of cryptocurrency trading platforms is necessary. He also warned that regulators have no way of acting if a virtual currency is stolen or if the platform is hacked.
“As Chairman Giancarlo and I stated recently, we are open to exploring with Congress, as well as with our federal and state colleagues, whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. We also are supportive of regulatory and policy efforts to bring clarity and fairness to this space.”
The FBI has recently offered its support to CFTC agents to analyse transactions in the bitcoin futures and spot markets to detect terrorist financing and evasion of sanction by countries like North Korea, said Giancarlo. This oversight might explain bitcoin’s recent plunge in value. “Word is getting out that we will go after misconduct, I think you’re seeing it in the price, and it’s an important step.”
This absence of authority has been described by CFTC Chairman J. Christopher Giancarlo as a ”gap”.
Regarding ICOs, Clayton said that every ICO he has looked into was a security offering, but that none of them was registered as offerings with the SEC. “ICOs that are securities offerings, we should regulate them like we regulate securities offerings, end of story,” he said.
General manager of the Bank for International Settlements, Agustin Carstens, said that bitcoin and other digital currencies do not correspond with the “basic textbook definitions” of currencies — that are backed by governments and their central banks.
He goes on to say that the crypto market ”has become a combination of a bubble, a Ponzi scheme and an environmental disaster, ”and that this case calls ”for policy intervention.”
SEC and CFTC have cracked down several times in the past few weeks on companies that have deceived investors.
“We’ve brought three actions in the last week and there are more to come,” said Mr Giancarlo. “We are working the beat hard.”
The crypto world is seeing more and more regulations to deter fraudulent actions and scams, and to eliminate the potential threats it poses to financial stability.