Explanation-How US Regulators Crack Down on Cryptocurrencies
WASHINGTON (Reuters) – Regulators around the world are cracking down on cryptocurrencies, alarmed by a rapidly expanding market that broke the record $ 2 trillion in April. China announced on Friday that it was banning all crypto trading and mining, bringing digital coins down.
Global regulators fear that rising private currencies will undermine their control of financial and monetary systems, increase systemic risks, promote financial crime and harm investors.
In the United States, regulators under President Joe Biden have launched several efforts to curb cryptocurrencies. Here is the breakdown:
THE PRESIDENT’S WORKING GROUP ON STABLECOINS
The President’s Financial Markets Task Force, made up of leading financial regulators, focuses on stablecoins, a type of digital coin tied to traditional currencies.
The group traditionally includes the Department of the Treasury, the Federal Reserve, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), but the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC ) are also involved.
At a meeting in July, the group discussed the rapid growth of stablecoins, their potential uses as a form of payment, and their potential risks to users, the financial system, and national security. Subsequently, Treasury Secretary Janet Yellen said the government must act quickly to establish a regulatory framework for stablecoins.
In meetings with industry executives this month, the Treasury also asked whether certain stablecoins would merit direct scrutiny if they became extremely popular, Reuters reported.
The group is expected to publish a report detailing the risks and opportunities of stablecoins in the coming months.
AMERICAN SECURITIES AND EXCHANGE COMMISSION
The main share comes from the SEC. In testimony before the Senate this week, SEC Chairman Gary Gensler said the agency is looking at cryptocurrencies in a number of areas: the supply and sale of crypto tokens; crypto trading and lending platforms; coins of stable value; investment vehicles offering exposure to crypto assets or crypto derivatives, and custody of crypto assets.
Gensler’s SEC also appears to be taking a more aggressive legal interpretation of when crypto assets come under its jurisdiction than the agency did under former President Donald Trump. Gensler said, for example, that so-called “DeFi platforms” – peer-to-peer crypto platforms that bypass traditional gatekeepers of finance such as banks and stock exchanges – fall under the purview of the SEC.
The agency launched its first DeFi-related enforcement action last month.
THE FED CENTRAL BANK DIGITAL CURRENCY PROJECT
The U.S. Federal Reserve is expected to release a long-awaited report shortly exploring the potential adoption of a digital dollar, while the Boston regional Fed is also working with the Massachusetts Institute of Technology to explore the technical aspects of a digital dollar.
As the Fed is on the cusp of creating its own digital coin, many policymakers in Washington see it as a critical step in the fight against the rise of private digital coins.
“SPRINT” TEAM OF BANKING REGULATORS
In parallel, a small group of senior executives from the Fed, OCC and FDIC collaborated on a “crypto policy sprint” focused on cryptocurrencies in relation to the banking industry.
OCC Acting Director Michael Hsu said the group’s goal was to “agree on definitions, use cases, risks and gaps, and discuss policy options. related to digital assets ”.
As part of that effort, the OCC is also reviewing a decision by the head of the agency under Trump that allowed domestic banks to take custody of the cryptocurrency.