Congress Considering Cryptocurrency Rules

What’s the story?

U.S. lawmakers are moving to consider rules that would impose stricter federal oversight on cryptocurrencies like Bitcoin, Ethereum, and Ripple.

Why does it matter?

As Reuters explained, "Virtual currencies have existed for years but speculation in them has recently ballooned, along with scams promising investors returns of over 1,000 percent in weeks." The past few months have also seen a number of high-profile cryptocurrency thefts, and a wildly fluctuating market where Bitcoin surged over 1,300 percent before losing over half its value.

"There’s no question about the fact that there is a need for a regulatory framework," Republican Senator Mike Rounds, a Senate Banking Committee member, told Reuters.

Currently, digital currencies fall into what the news outlet describes as a "jurisdictional gray area between the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Treasury Department, the Federal Reserve, and individual states."

At a recent hearing of the Senate Banking, Housing and Urban Affairs Committee, the Trump-appointed chairman of the SEC, Jay Clayton, said:

"Many promoters of initial coin offerings and cryptocurrencies are not complying with our securities laws and, as a result, the risks are significant."

Speaking about the SEC and CFTC’s limited power to regulate virtual currencies, Clayton added that "there are significant security risks that can arise by transacting in these markets, including the loss of investment and personal information due to hacks of online trading platforms and individual digital asset 'wallets.'"

The concern crosses party lines. New York's Carolyn Maloney, a Democratic senior member of the House Financial Services Committee, cautioned that "a lot of people don’t realize there’s nothing backing these virtual currencies."

What do you think?

Should cryptocurrencies be considered a security or commodity? Which department should they fall under? Or does Congress need to establish a new Cryptocurrency Exchange Commission? Hit Take Action and tell your reps, then share your thoughts below.

Take Action

—Josh Herman

(Photo Credit: KeremYucel / iStock)