Crypto Space Continues to Be Regulated Globally, as the US Congress Introduces Two New Bills on Cryptocurrencies
Cryptocurrencies have been facing the wrath of regulatory authorities across the globe. The crypto space is now being heavily regulated even by countries which previously had liberal views on digital assets.
The major drawback of crypto regulations is that they are laid by authorities with minimum or no experience in blockchain or crypto assets. Therefore, they end up formulating bizarre policies at times. Especially, after the market collapse of last year, many countries have been laying stricter norms for cryptocurrencies.
The United States was also expected to revamp regulatory policies for a long time, and the US Congress has now taken a big step in this regard. The lawmakers have introduced two new cryptocurrency related bills, in a bid to tackle the problem of price manipulation and boost the country’s growth in the sector. The two bills were introduced by representatives Darren Soto and Warren Davidson.
The first of these bills, Bill H.R. 922 – Virtual Currency Consumer Protection Act of 2019, is focused on combating the evil of price manipulation. The need for such a bill was needed for a long time. Bitwise, a digital asset management company recently claimed earlier in March, that about 95% of the total sales volumes posted by crypto exchanges are fake. Such allegations must be taken very seriously, as the market has just started to recover from its worst nightmare.
The crypto space suffered bearish trends throughout 2018, as most digital tokens lost as much as 90% of their price value. Bitcoin, too, kept losing for six consecutive months, finally breaking the trend in February earlier this year.
Since February, several unregulated crypto exchanges have been posting double value numbers than what was expected. This led to closer scrutiny by expert analysts, who found that these exchanges have been faking numbers to create traction for their platform. An independent investigation by New York-based crypto management firm, The TIE and Social Market Analytics revealed that 59% of exchanges have manipulated the trading volume data by more than 90%.
The first bill has been formulated to curb such fraudulent activities. As per the bill, the Commodity Futures Trading Commission (CFTC) Chairman will be required to submit a report containing details of the potential virtual currency (Cryptocurrencies) price manipulation, along with methods, vulnerable groups, consequences band damage to investors. The document also gives the definition for ‘virtual currency’ as,
“digital representation of value that does not have legal tender status and that functions as a medium of exchange, a unit of account, or a store of value.”
The second bill, Bill H.R 923. – U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2019, is aimed at boosting the country’s competitive edge in the crypto space. After this bill is passed, the CFTC Chairman will have to submit another report in consultation with chiefs of SEC and other relevant federal agencies. The report would contain details regarding the essential measures required to promote the country more competitive in the crypto space.
The report will show a comparative study of the prevailing laws in the US with international regulations. It would also evaluate the benefits of digital currencies and distributed ledger technology for the country’s commodities market, and also contain legislative recommendations. The Bill also directs regulators to propose a renewed framework for crypto exchanges, that must include measures consumer protection, federal licensure, and market surveillance.
Crypto regulations are need of the hour, though many people have termed them as the biggest roadblock in the pathway of crypto success. Nonetheless, as markets get regulated, credibility and reliability will definitely increase.
