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U.S. financial authorities are preparing to take a more active role in regulating $ 1.5 billion cryptocurrency market, the lack of proper supervision with growing concern risks damaging savers and investors.
The new effort reflects a break with the Trump administration, which in some cases encouraged the use of cryptocurrencies in the financial system. But it may take time for US regulators to struggle to find out who has the legal authority to oversee the unstable market.
In an interview with the Financial Times, Michael Hsu, who was installed as a currency controller this month, said he hoped U.S. officials would work together to establish a “regulatory perimeter” for cryptocurrencies.
“It’s really about inter-agency coordination,” said Hsu, head of the Finance Department, which oversees national banks. “When I talk to some of my classmates, there’s an interest in coordinating these things a lot more.”
Cryptocurrencies have been rolling down the roller coaster this year. In February, the price of Bitcoin rose Tesla founder Elon Musk he said the company pledged $ 1.5 billion in the cryptocurrency and set a record high of $ 60,000 in April.
But the price went down After Chinese regulators expressed opposition to the use of digital coins, Musk reversed the move to allow bitcoin payments for Tesla cars, citing environmental concerns. Other cryptocurrencies have had similar volatility.
A sign of the new U.S. approach came this month with the first meeting of an inter-agency crypto “sprint” group attended by officials from three major federal regulatory banks – the Hsu Currency Controller’s Office, the Federal Reserve and the Federal Deposit Insurance Corporation.
Hsu said the group’s goal was not to do politics, but to “put some ideas in front of the agency to consider,” while trying to regain growth. cryptocurrencys.
“It’s small and it’s old,” Hsu said of the team. “The idea is that time is of the essence and if it’s too big it gets complicated.”
The Securities and Exchange Commission and the Futures Commodity Trading Committee have discussed how to protect investors in the cryptocurrency market.
Gary Gensler, president of the SEC, told a House committee last week that there are “gaps in our system,” pointing out the potential need for legislation to determine whether legislation should oversee cryptographic exchanges.
Gensler said his goal is to bring “similar protections to exchanges where you trade cryptocurrencies as you would expect on the New York Stock Exchange or the Nasdaq.”
Gensler said the Treasury department has relied on “protection against money laundering and illegal activity” in the crypto market. Finance Secretary Janet Yellen said the fear is that bitcoin is “often used for illegal financing”.
By installing Hsu OCC, Yellen also noted a change in approach to crypto. Hsu, in his words, “is a career civil servant and bank supervisor at my base.” Among the predecessors of Donald Trump’s subordinate OCC, Brian Brooks, former head of cryptocurrency law at Coinbase, is now CEO of Binance. USA, rival crypto exchange.
Hsu was one of the first acts of the OCC to ask employees to review Trump’s decision at the time to issue letters of confidence to companies that offer cryptocurrency surveillance services.
Although Hsu believes there is no turning back from innovations such as blockchain technology used in cryptocurrencies, this month’s congressional testimony said the current enthusiasm for banking innovation reminded him of the years before the financial crisis.
The risk is that new and improved techniques will create a “large and less regulated shadow banking system”. He said today that fintech and technology platforms are inventing payment processing tools, “but also risks.”
“It’s hard for me not to feel some déjà vu,” Hsu told lawmakers.
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