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Financial regulators have urged Congress to pass legislation in a new report on cryptocurrencies. The report, released by the U.S. Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC), and the Financial Crimes Enforcement Network (FinCEN), calls for cryptocurrency regulations to ensure the safety and security of crypto investors.
The report outlines the need for more clarity and guidance on cryptocurrencies, stating that “legislation and regulation should be tailored for virtual currency markets to safely and effectively protect investors and unlock the potential of the technology, while preventing its misuse.”
The report also highlights the risk of fraud and money laundering posed by the lack of clarity surrounding cryptocurrencies. It calls for more comprehensive and uniform regulations that “limit opportunities to exploit the benefits of virtual currency technologies without proper oversight and governance.”
The top regulators expressed their belief that legislative efforts should focus on three main areas: establishing and enforcing anti-money laundering standards, setting up an appropriate regulatory framework for virtual currency firms, and combating fraud. The report also highlights the need to update consumer protection regulations to provide a level playing field between virtual currencies and more traditional financial services.
The report’s publication is the latest in a series of steps taken by the regulators to explore and understand virtual currencies. The CFTC has set up an Innovation Office to help facilitate development of digital assets in line with the agency’s mission to enhance market integrity and promote market efficiency. Earlier this year, the SEC charged Zachary Coburn, founder of the now-defunct Ethereum token sale project EtherDelta, with running an illegal securities exchange.
With the regulators pushing for clearer and more comprehensive cryptocurrency regulations, Congress has an opportunity to provide much-needed oversight to the nascent sector. It remains to be seen whether it will do so, but the report’s recommendations are a good place to start.