Crypto businesses came under intense scrutiny today as the Biden administration announced a new round of proposals to crack down on fraudulent activity in the digital asset market.
Under the proposed framework, the US Congress could impose a legal obligation on cryptocurrency exchanges to report suspicious transactions to regulators, extending the rules that currently apply to banks under the Bank Secrecy Act. Fines for transmitting money without a license are set to increase, while those involved in crypto theft could be prosecuted in any jurisdiction in which a victim is identified.
The move is part of a wider crackdown on the activities of crypto firms after billions of pounds of retail investor holdings were put at risk amid a string of recent insolvencies. At least 10 crypto firms have filed for bankruptcy or suspended withdrawals since the start of the year, after the price of Bitcoin has fallen 49% since January, an analyst warning of a crash-like ‘domino effect’ of 2008 in the crypto market resulting from “institutions taking illogical risks, largely at the expense of investors.”
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United States Treasury Secretary Janet Yellen said, “Innovation is one of the hallmarks of a vibrant financial system and economy, but as we have painfully learned from history, innovation without proper regulation can cause significant disruption and harm the financial system and individuals. ”
It comes after the US markets regulator, the Securities and Exchange Commission, said companies that hold cryptocurrencies on behalf of investors should recognize them on their books as liabilities, reflecting the “significant increased risks ” of digital asset protection compared to traditional asset classes.
Viktor Prokopenya, founder of cryptocurrency exchange Currency.com, said the crypto market “needs to shed its Wild West image and mature as a financial framework in its own right. Around 10% of the population in developed countries now own crypto, and it’s worth hundreds of billions of dollars – which could disappear in the blink of an eye without regulation.
“We can expect regulation to promote consumer and investor protection, market integrity and financial stability, leading to increased legitimization of the sector. We should not fear it, but rather adopt the regulations at the end of the next stage of crypto development.
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Crypto Firms Under New Scrutiny After Biden Admin Proposes Crackdown
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