The cryptocurrency space is being impacted by regulatory authorities in the United States, according to Crypto Briefing.
- As the cryptocurrency market has risen in popularity, officials have become more interested in keeping an eye on it.
- Several US authorities, including the SEC, CFTC, and OCC, are in charge of drafting crypto regulations.
The US Treasury Department is also involved in determining how crypto assets should be regulated and contacting legislators.
Financial regulatory agencies in the United States include the Securities and Exchange Commission and the Commodities Futures Trading Commission. We describe the country’s primary regulatory authorities and their impact on the crypto industry in this section.
In the United States, there are a number of key crypto regulators.
Since the inception of cryptocurrency, enthusiasts and observers alike have speculated on how authorities will approach the asset class. As the space industry has developed, and regulators around the world have made it apparent that they are watching the space, it has become a more pressing matter. A crypto market surge in 2021 demonstrated that the technology had entered the mainstream. Regulatory bodies are actively looking into how to manage the field as interest in Bitcoin, DeFi, and stablecoins grows.
It’s difficult to talk about global cryptocurrency policy without mentioning the United States’ regulatory institutions. Several organisations, federal agencies, and departments in the United States government have been keeping a close eye on the digital assets field during the previous decade. The Securities and Exchange Commission, the Commodities Future Trading Commission, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Treasury Department, the Federal Reserve, and the Financial Crimes Enforcement Network have all influenced crypto policy in the United States.
Furthermore, as blockchain startups have entered the financial services industry, some of these organisations have shifted their attitude on crypto. Many people have attempted to bring cryptocurrency regulation under the same guidelines as traditional banking and finance. In order to create a complete crypto framework in the United States, all of the major financial regulators may need to work together. At the moment, no single entity is regarded as the standard-bearer for American crypto policy. Many of them, however, routinely collaborate to manage the rapidly evolving world of cryptocurrencies.
SEC stands for Securities and Exchange Commission.
The Securities and Exchange Commission is one of the most active regulators of cryptocurrency in the United States. It was established in 1934 to combat fraud involving the selling of securities or financial contracts.
Simply put, the Securities and Exchange Commission (SEC) is in charge of monitoring the securities industry. The SEC takes action against crypto ventures that it believes have raised money unlawfully in the context of cryptocurrencies. This frequently happens when organisations or projects offer tokens to American investors that could be considered securities without filing with the SEC or following the proper procedures.
Several crypto ventures have been charged by the SEC throughout the years, many of which solicited funds through initial coin offerings. The SEC’s legal lawsuit against the popular messaging app Telegram was one of the most high-profile cases. The regulator ordered Telegram to repay $1.2 billion to investors acquired through a coin offering and fined the business $18.5 million in June 2020.
In other cases, the SEC charged and eventually settled with EOS and Kin for making unregistered securities sales through initial coin offerings. It also went to court in December 2020, accusing Ripple of illegally profiting from the sale of unregistered securities worth $1.38 billion in the form of XRP coins. The case is still in progress.
The SEC’s activities show that assessing whether or not a crypto is a security in order to regulate it is their primary goal. However, there is another area where the SEC has had an impact on the crypto business. The agency is also in charge of approving cryptocurrency-backed trading products like a Bitcoin exchange-traded fund. The agency approved the first exchange-traded fund linked to Bitcoin futures contracts in the fourth quarter of 2021. While the SEC’s approval of a Bitcoin futures ETF was a watershed moment in crypto regulation, it has been slow to approve a much-anticipated spot Bitcoin ETF.
Gary Gensler, the SEC’s chair, has also issued numerous warnings about DeFi and stablecoins, raising worries about how the agency would approach the industry in the future.
The Commodities Futures Trading Commission (CFTC) is a federal agency that regulates the
The Commodities Futures Trading Commission is a federal organisation in the United States that oversees the regulation of financial derivatives. It is responsible for enforcing laws governing the trading of financial contracts (such as futures, options, and swaps) for commodities, securities, bonds, and cryptocurrencies. The Commodity Futures Trading Commission (CFTC) declared cryptocurrencies like Bitcoin to be commodities under its jurisdiction in 2015. The government has taken regulatory action against exchanges that offer futures or options contracts on crypto assets such as Bitcoin and Ethereum to American consumers.
The CFTC, like the SEC, has taken action against crypto businesses it believes are breaking derivative asset laws. The CFTC charged BitMEX in October 2020 for illegally selling Bitcoin derivatives trading to U.S. consumers. A year later, it led an enforcement case against Tether and Bitfinex, accusing its parent company, iFinex, of providing unregistered trading services to US residents. The CFTC eventually reached an agreement with iFinex and fined the company $42.5 million.
While the CFTC has complete regulatory authority over crypto derivatives services provided to US citizens, it rarely intervenes in crypto spot markets. CFTC Chair Rostin Behnam, on the other hand, has urged Congress for more authority in crypto supervision and $100 million in new money to monitor the space. It’s clear that the CFTC wants to play a bigger role in crypto regulation, and reports suggest that the agency may team up with the SEC to manage crypto regulation in the future.
Comptroller of the Currency’s Office
In the United States, the Office of the Comptroller of the Currency is the primary regulatory body in charge of overseeing the activities of national banks and federal savings institutions. The OCC regulates how banks can use cryptocurrency in their custody holdings and on their balance sheets. Brian Brooks, the former Acting Comptroller of the Currency, was the regulator’s first big crypto participation in July 2020. The OCC issued a guideline letter to US national banks under his supervision, allowing them to provide custody services, store stablecoins in their reserves, and even run blockchain nodes.
The Federal Deposit Insurance Corporation (FDIC) is a government-run
While investing in dollar-pegged stablecoins can yield larger returns than typical savings accounts, stablecoins are riskier than real-dollar deposits because they lack government-backed protection. As a result, sufficient insurance may be one of the missing connections in the adoption of stablecoins in the United States. And it’s here that the Federal Deposit Insurance Corporation could come in handy. The Federal Deposit Insurance Corporation (FDIC) is the regulatory agency in charge of insuring bank deposits in the United States up to $250,000 per depositor. The FDIC announced last year that it was looking into deposit insurance for stablecoins.
The FDIC was rumoured to be examining insurance coverage for USDF, a stablecoin designed by a group of US banks including FirstBank of Nashville, Synovus, New York Community Bank, and Sterling National Bank, in January 2022. The Federal Deposit Protection Corporation’s (FDIC) insurance for custodian crypto accounts is a much-needed market solution. Still, it’s unclear whether the FDIC will be on the stablecoin bandwagon. Martin Gruenberg, the FDIC’s newly-appointed Acting Chair, stated that analysing crypto risks is one of the agency’s top goals for 2022.
The Federal Reserve was established in 1913
The Federal Reserve is the central bank of the United States, and it is in charge of the country’s monetary policy. It is the primary printer of all dollar bills in circulation in the United States of America. The agency oversees the country’s payments infrastructure and, in the 1970s, created the Automated Clearing House system, which provides an electronic alternative to paper checks. The Federal Reserve’s engagement in crypto regulation has nothing to do with any direct policy that may have an impact on the industry. It is, however, in charge of developing a prospective central bank digital currency, an official government-backed digital dollar that will be integrated into the United States’ money-transfer infrastructure in the coming years.
Treasury Department of the United States of America
Despite the fact that the US Department of Treasury is not a regulatory agency, it plays a critical role in defining how crypto assets will be governed. Because the executive department is in charge of the federal government’s treasury, this is the case. The Treasury Department’s role includes discussing the impact of crypto assets on American monetary, economic, and tax policy with lawmakers. Treasury Secretary Janet Yellen has publicly expressed her concern about the use of cryptocurrencies for illegal transactions, as well as the financial concerns that stablecoins bring to the American economy.
In terms of crypto-specific functions, the Treasury Department administers the Internal Revenue Service, which collects federal taxes. As a result, the Treasury Department’s impact on crypto is primarily focused on tax policy and the integration of the asset class into the country’s tax system. According to rumours, the Treasury Department will require “cryptocurrency brokers” to record all transactions over $10,000 as part of a provision adopted by the bipartisan 2021 Infrastructure Bill.
In addition, the Treasury’s Financial Crimes Enforcement Network (FinCEN) monitors track of transactions to prevent money laundering and other violations of the Bank Secrecy Act. Larry Dean Harmon, the founder of the Bitcoin mixers Helix and Coin Ninja, was fined by FinCEN last year after they were used to launder cash between 2014 and 2020. FinCEN penalised BitMEX $100 million in August 2021, alleging a lack of anti-money laundering processes on its Bitcoin derivatives trading platform as well as a violation of the Bank Secrecy Act.
The Future of Cryptocurrency Regulation in the United States
There is little doubt that crypto has hit the mainstream following last year’s market boom. As a result, regulators throughout the world are keeping a tight eye on the space. The rise of DeFi and stablecoins, in addition to Bitcoin, has become a hot topic among regulatory agencies. The SEC, CFTC, OCC, FDIC, Federal Reserve, and Treasury Department have all started monitoring the space and weighing in on crypto policy in the United States. As the number of digital assets grows, it’s conceivable that government agencies in the United States will become increasingly involved in regulating the sector.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.