Regulators Are Catching Up With The Crypto Boom
Say goodbye to the under-regulated era of cryptocurrency. While crypto trading on the more mainstream exchanges is fueling the market, it’s also bringing greater scrutiny from regulators, as shown by the recent report by the New York State Attorney General’s office (OAG) on crypto exchange abuse, The Financial Action Task Force (FATF) announcements about upcoming crypto standards, and warnings to investors. And as guidance emerges and enforcement actions increase, crypto exchanges will, slowly but surely, start to look a lot more like other regulated financial markets. Just last month, the Financial Crimes Enforcement Network (FinCEN) announced that it now receives over 1,500 suspicious activity reports (SARS) on crypto a month now.
In the early years, crypto-trading occurred through a fragmented network of exchanges around the world, largely between anonymous parties. But it was the 2016-17 boom in Bitcoin, Ethereum, and Litecoin that really brought crypto trading to the attention of regulators.
As it stands, the current shifting regulatory landscape for cryptocurrencies in the U.S. is still very confusing. State and federal regulators are struggling to keep pace with the innovations in cryptocurrencies, and the speed to which trading has taken off.
An administrator or exchanger of cryptocurrency is a money services business (MSB). MSBs are considered financial institutions under the Bank Secrecy Act. This, in turn, means that they fall under the FinCEN’s oversight. The Securities and Exchange Commission (SEC) considers some cryptocurrencies and Initial Coin Offerings (ICOs) as securities, and therefore subject to securities regulations. The U.S. Commodity Futures Trading Commission also views virtual currencies as commodities. At the same time, the Financial Industry Regulatory Authority (FINRA)just recently filed its first enforcement action against an individual for marketing an unregistered cryptocurrency security. And those are just the federal agencies—the New York State Department of Financial Services (DFS), by way of example, regulates virtual currency activities through its BitLicenses and trust company charters. If that all sounds complicated, that’s because it is.
Source: Forbes News