Crypto crash has legislators considering new regulations to protect consumers
U.S. regulators are growing concerned in a week that has seen BTC lose a quarter of its value
U.S. regulators and lawmakers may be revisiting legislation for crypto assets following a wild week of trading that has seen Bitcoin prices plunge by $15,000 at one point.
According to a May 20 Bloomberg report, Washington’s financial regulators are still unsure of how to regulate the volatile markets. As banking regulators testified on Capitol Hill on Wednesday, the Federal Reserve’s Vice Chairman of Supervision, Randal Quarles, spoke of a lack of sufficient regulations, stating:
“We are in the process at the Fed of studying the various ways to address this issue,”
He added that federal agencies need time to consider the right regulatory approach before they can then create a framework for oversight. U.S. authorities are still primarily concerned with the illicit activities associated with decentralized digital assets such as market manipulation, money laundering, and a growing trend in ransomware attacks.
Texas Democrat Al Green implored Quarles to offer ideas on how Congress should regulate the market declaring that: “This is a serious issue. We need your expertise.”
Bitcoin and cryptocurrency markets are volatile by nature and large corrections of this magnitude have been the norm after such rapid ascents, however financial regulators appear unnerved by this latest rout.
Acting Comptroller of the Currency Michael Hsu said he and other regulators have discussed setting up an inter-agency task force on crypto tokens. Meanwhile, Senate Banking Committee Chairman Sherrod Brown separately voiced concerns over the volatility of cryptocurrencies.
“It tells me that fintech companies and others operating outside the regulatory system can pose a danger. I don’t know the solution yet with these, but it’s cause for concern.”
In a May 19 letter to acting Comptroller of the Currency Michael Hsu, Brown expressed concern about the OCC’s authority to grant charters to financial and non-financial companies. He specifically mentioned crypto companies Paxos, Protego, and Anchorage which were granted national trust charters under the previous head, Brian Brooks, who left the OCC to join Binance.
Sherrod accused Brooks of favoring crypto companies stating that: “A firm that cannot meet the rigorous requirements applicable to other banks should not be allowed to present itself to the public as a bank.”
He recommended that the OCC reassess any conditional national trust charters and halt the approval of any additional charters to non-bank entities.
Earlier this month, Securities and Exchange Commission Chairman Gary Gensler advised lawmakers on at least one change that he thought they should make which is granting the SEC clear authority over crypto exchanges.
Commenting on the highly speculative nature of Bitcoin, Gensler stated that, “it could go to zero or it could go high and that’s the nature of it,” adding that there is currently a gap in the system with regards to regulation and investor protection.