As the price of Bitcoin has completed one of its worst plunges, the tone of U.S. regulators toward BTC and crypto is intensifying. U.S. regulators and lawmakers may be reconsidering crypto-asset legislation after a wild week of trading that saw the price of Bitcoin drop $15,000 at one point.
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The tone against bitcoin is getting tougher
According to a Bloomberg report on May 20th, financial regulators in Washington are still unsure how to regulate the volatile markets. As bank regulators testified on Capitol Hill Wednesday, Federal Reserve Vice Chairman of Supervision Randal Quarles spoke of a lack of sufficient regulations. He stated: “We are at the Fed looking at the various ways to address this problem.”
He added that federal agencies need time to think about 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 called on Quarles to submit ideas on how Congress should regulate the market, stating: “This is a serious problem. We need your expertise.”
Bitcoin is a problem that needs to be solved
The bitcoin and cryptocurrency markets are inherently volatile and large corrections of this magnitude have been the norm after such rapid rises, but financial regulators seem unnerved by this latest rout.
Acting Comptroller of the Currency Michael Hsu said he and other regulators have discussed establishing an interagency working group on crypto tokens. Meanwhile, Senate Banking Committee Chairman Sherrod Brown separately expressed concerns about the volatility of cryptocurrencies. “It tells me that fintech companies and others operating outside the regulatory system can pose a threat. I don’t know the solution with these yet, but it is cause for concern.”
In a May 19th 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 previous head Brian Brooks, who left the OCC to join Binance.
Sherrod accused Brooks of favoring crypto firms, stating: “A firm that cannot meet the stringent requirements that apply to other banks should not be allowed to present itself to the public as a bank.”
He recommended that the OCC reevaluate all conditional national trust charters and stop approving additional charters for nonbank companies.
Earlier this month, Securities and Exchange Commission Chairman Gary Gensler advised lawmakers to give the SEC clear authority over crypto exchanges. Referring to the highly speculative nature of Bitcoin, Gensler stated that there is currently a gap in the system in terms of regulation and investor protection.
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