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The recent crypto crash, which saw Bitcoin (BTC) plunged from its all-time high above $64,000 to just around $31,000, might have consequences beyond the losses sustained by some investors. U.S. regulators and lawmakers are revisiting legislation for cryptocurrencies to find ways how to best respond to such scenarios in the future.
Financial regulators are still unsure how to regulate the highly volatile digital assets market. “We are in the process at the Fed of studying the various ways to address this issue,” Federal Reserve’s Vice Chairman of Supervision Randal Quarles said on Wednesday, according to Bloomberg.
He admitted that federal agencies need time to figure out the right regulatory approach prior to coming up with a framework for oversight. Aside from market manipulation, they also need to address concerns that digital assets are being used by criminals for illicit activities such as money laundering and ransomware attacks.
Lawmakers are also cognizant that they might not have the expertise to tackle the issue without the inputs of experts. “I’m trying to figure out what we can do,” Texas Democrat Al Green told Quarles. “This is a serious issue. We need your expertise.”
Seasoned investors are aware that the Bitcoin and cryptocurrency markets are highly volatile and large corrections following rapid ascents are the norm, according to Cointelegraph. However, the recent pullback, which wiped out around $500 billion from the market, might have unnerved regulators.
Other agencies have already explored some options on how to respond. For instance, acting Comptroller of the Currency Michael Hsu revealed that he and other regulators are in discussion on setting up an inter-agency task force on tokens.
Senate Banking Committee Chairman Sherrod Brown also voiced concerns on the dangers of entities operating outside the reach of the current regulation. “It tells me that fintech companies and others operating outside the regulatory system can pose a danger,” he said. “I don’t know the solution yet with these, but it’s cause for concern.”
Meanwhile, Pennsylvania Senator Pat Toomey believes there’s yet no need to regulate cryptos. “It may get to that point, but not based on volatility of the asset price,” he said in an interview. “There is no cryptocurrency that is a true currency at this point, in the sense that it is not widely used as a medium of exchange. If that were to change, then we would have to ask ourselves a lot of questions about the use of it.”
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