LOGIN

Regulatory Interventions in Cryptocurrency: Congress Yet to Act Amid Rising Incidents

by Lucas Garcia
7 comments
Cryptocurrency Regulation

Amidst the unending scandals shaking the cryptocurrency sector, lawmakers in Washington seem disinclined to enact legislation that would establish a formal regulatory framework for the industry.

The recent agreement for Binance to pay billions in a settlement to U.S. authorities, coupled with the resignation of its CEO, marks the latest development in the industry’s turmoil. This follows the conviction of FTX’s Sam Bankman-Fried for customer fund misappropriation and the downfall of several smaller crypto firms, resulting in substantial financial losses for investors.

Last year, when the cryptocurrency market crashed and numerous firms failed, Congress pondered various regulatory strategies for the future of the industry. Nonetheless, most of these initiatives have stalled, overshadowed by this year’s chaos fueled by geopolitical conflicts, inflation, and the impending 2024 elections. There seems to be a declining interest in establishing new regulations.

U.S. Treasury Secretary Janet Yellen, in a news conference announcing Binance’s $4 billion settlement, emphasized that existing regulations are applicable to cryptocurrencies. She stated, “Today’s actions demonstrate our commitment to enforcing robust existing regulations to deter illegal activities facilitated by cryptocurrency entities.” Yellen highlighted the government’s readiness to update and utilize its regulatory tools to tackle emerging threats in cases of egregious violations.

In October, over 100 primarily Democratic lawmakers urged the White House to take responsibility for preventing the use of cryptocurrencies in financing terrorism.

Binance’s CEO, Changpeng Zhao, admitted guilt to a felony for not preventing money laundering on the platform. Zhao resigned following Binance’s admission of violating the Bank Secrecy Act and other sanction-related regulations. The settlement terms mandate Binance, a Cayman Islands company, to undergo five years of monitoring and ensure its complete withdrawal from the U.S. market.

U.S. Attorney General Merrick Garland described the settlement as one of the largest corporate penalties in U.S. history. This development comes as major crypto entities, including Binance, Coinbase, and FTX, face severe legal challenges, investigations, or have collapsed.

In the absence of Congressional action, federal agencies like the Securities and Exchange Commission (SEC) have initiated enforcement measures against the industry. This includes lawsuits against prominent exchanges such as Coinbase, Binance, and Kraken. Recently, the SEC charged Kraken for operating as an unregistered securities exchange. PayPal, too, received a subpoena from the SEC concerning its stablecoin.

Some Congress members have criticized the SEC’s approach, arguing for Congressional authorization for such actions or suggesting that cryptocurrencies be regulated as commodities, which would fall under the Commodity Futures Trading Commission’s purview. Senators Debbie Stabenow (D-Mich.) and John Boozman (R-Ark.) proposed last year to transfer cryptocurrency regulatory authority to the CFTC.

Congress, despite proposing measures, has not yet acted. A major hindrance is the lack of consensus on defining cryptocurrencies and opposition from influential Congressional members, such as Sen. Sherrod Brown (D-Ohio), who chairs the Senate Banking Committee. Brown, a critic of cryptocurrencies, has not advanced any legislation through his committee, emphasizing the need to address crypto-related scams and frauds.

In the House, a bill for regulating stablecoins passed the House Financial Services Committee but has yet to gain traction in the Senate or the White House.

Consumer advocates question the necessity of new regulations and the usefulness of cryptocurrencies. Dennis Kelleher, president of Better Markets, urges for more stringent industry compliance to standard financial practices.

Some analysts, however, view the recent legal developments as a turning point for cryptocurrency. Yiannis Giokas of Moody’s Analytics interprets the Binance settlement as marking a new phase in digital currency evolution, akin to the transition from the dot-com era. He anticipates stricter regulations and enforcement to ensure compliance and consumer protection in this increasingly mainstream and institutionally involved space.

Frequently Asked Questions (FAQs) about Cryptocurrency Regulation

What recent developments have occurred in the cryptocurrency industry involving U.S. authorities?

The cryptocurrency industry has witnessed significant developments, including Binance’s multibillion-dollar settlement with U.S. authorities and the resignation of its CEO. Additionally, there have been legal actions against major entities like FTX and smaller crypto companies, leading to financial losses for investors.

How is the U.S. Congress responding to the cryptocurrency industry’s issues?

Despite various proposals, the U.S. Congress has yet to enact legislation to regulate the cryptocurrency industry. Efforts to define and regulate the industry have been overshadowed by other priorities, such as geopolitical tensions and economic concerns.

What was the nature of Binance’s settlement with U.S. authorities?

Binance agreed to a $4 billion settlement with U.S. authorities for violations of the Bank Secrecy Act and other sanctions programs. This includes a plea of guilt to felony charges related to money laundering and a commitment to exit the U.S. market.

What role has the SEC played in regulating cryptocurrencies?

The Securities and Exchange Commission (SEC) has taken an active role in enforcing regulations against major cryptocurrency exchanges like Coinbase, Binance, and Kraken. This includes filing lawsuits and charging Kraken with operating as an unregistered securities exchange.

What are some Congressional perspectives on cryptocurrency regulation?

Some Congress members argue that the SEC requires Congressional approval to act against cryptocurrency entities, while others suggest that cryptocurrencies should be regulated more like commodities by the Commodity Futures Trading Commission.

What is the stance of consumer advocates on cryptocurrency regulation?

Consumer advocates express skepticism about the need for new cryptocurrency regulations, emphasizing the need for the industry to adhere to standard financial practices and address fraudulent activities.

More about Cryptocurrency Regulation

  • Cryptocurrency Industry Challenges
  • U.S. Congress and Crypto Regulation
  • Binance’s Legal Settlement
  • SEC’s Role in Crypto Enforcement
  • Congressional Views on Crypto
  • Consumer Advocacy and Crypto Regulation

You may also like

7 comments

EconNerd November 23, 2023 - 3:08 pm

really solid overview of a complex topic. But I think there’s more to the story, like how these regulations impact the global market.

Reply
TechWatcher November 23, 2023 - 6:55 pm

interesting article, but it seems a bit biased against cryptocurrencies? or is it just me thinking this.

Reply
JohnDoe87 November 23, 2023 - 8:14 pm

I think the article really captures the complexity of crypto regulation right now. But isn’t it a bit too optimistic about Congress acting soon?

Reply
CryptoQueen November 23, 2023 - 10:01 pm

wow, didn’t realize how deep the issues with Binance were. this stuff is crazy, regulators are on fire!

Reply
BlockchainBuddy November 24, 2023 - 2:32 am

Great article but you kind of oversimplified the role of the SEC, they do a lot more than just lawsuits.

Reply
FinanceGuru101 November 24, 2023 - 2:47 am

Great read, but you missed some points about international regulations affecting U.S. policies. Also, there’s a typo in the second paragraph.

Reply
LegalEagle November 24, 2023 - 10:05 am

Good summary on the legal aspects, but it’s “commodity futures trading commission” not “commodity futures trading comission”, small typo there.

Reply

Leave a Comment

BNB – Big Big News is a news portal that offers the latest news from around the world. BNB – Big Big News focuses on providing readers with the most up-to-date information from the U.S. and abroad, covering a wide range of topics, including politics, sports, entertainment, business, health, and more.

Editors' Picks

Latest News