House panel calls for oversight of cryptocurrency fraud

WASHINGTON– A House oversight subcommittee on Tuesday asked regulators and industry leaders to explain what they are doing to stop cryptocurrency fraud and other scams being perpetrated against consumers.

Illinois Rep. Raja Krishnamoorthi, head of the Economic and Consumer Policy Subcommittee, asked heads of the Treasury Department, Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Trade Commission for more information on the steps they are taking to curb the growth of cryptocurrency-related consumer fraud and abuse.

The inquiries come as the cryptocurrency market has seen immense volatility, with bitcoin losing almost half of its value at one point this year and other cryptocurrencies falling even further.

“Despite these vulnerabilities, the federal government has been slow to crack down on cryptocurrency scams and fraud. Existing federal regulations do not comprehensively or clearly cover cryptocurrencies in all circumstances,” reads a letter to Treasury Secretary Janet Yellen.

Five of the largest cryptocurrency exchanges have also received letters of inquiry, requesting documents on company policies regarding the removal of fake accounts.

A report on the impacts of cryptocurrencies and other digital assets on financial markets and illicit finance is expected to be released in the coming weeks. In March, President Joe Biden issued an executive order calling on multiple agencies to seek ways to regulate digital assets and giving them 180 days to do so.

On Monday, the Federal Bureau of Investigation warned that criminals are more frequently exploiting vulnerabilities in some decentralized financial platforms to steal cryptocurrency.

Several major legislative proposals have also been presented to Congress this year.

Meaning. Debbie Stabenow, D-Mich., and John Boozman, R-Ark. proposed a bill that would give regulatory authority over Bitcoin and Ether to the Commodities Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which has authority over the CTFC.

In June, the senses. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo., proposed the Responsible Financial Innovation Act, which would create legal definitions of digital assets and virtual currencies; require the IRS to adopt guidelines on merchant acceptance of digital assets and charitable contributions; and would distinguish between digital assets that are commodities and those that are securities.


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