Based on remarks made recently by Securities and Exchange Chairman Jay Clatyon, the United States Congress may be asked to pass legislation soon that will help regulate various types of virtual currencies, most notably Bitcoin. As these currencies have risen in popularity in recent years, many industry regulators have become concerned about a lack of oversight in this area. These concerns, coupled with recent market losses that have led to Bitcoin losing half its value, have prompted legislators to take a closer look at the issue.
The SEC, working in conjunction with the U.S. Treasury Department and the Commodity Futures Trading Commission, is currently examining how new laws regulating virtual currency would impact national and international financial markets. With some banks now refusing to allow customers to use credit cards to purchase Bitcoin, regulators are concerned about such issues as market volatility, investor protections, and the threat of cyber criminals hacking into various virtual currency markets, which could cause chaos in other financial markets.
According to lawmakers, the recent incident involving hackers stealing $530 million from the Japanese bitcoin exchange Coincheck had much to do with the sense of urgency to pass legislation. As the current rules stand, virtual currencies are essentially unregulated, falling into what regulators consider to be cracks that exist between federal and state regulators, the SEC, Treasury Department, and other related agencies.
If legislation is passed on this matter, congressional legislators believe there would be numerous benefits to companies as well as investors. Along with having laws that are much clearer to everyone involved, investors would also have many more protections in place to guard them against cyber thieves. If this occurs, SEC Chairman Clayton and heads of other agencies have said they would be very aggressive in pursuing those who attempt to defraud investors, and would also coordinate efforts with the FBI if there were suspicions of money laundering associated with funding terrorist operations.
According to Chairman Clayton, senators, and other agency heads, if legislation is passed to regulate virtual currencies such as Bitcoin, one concern all agencies will have is funding which will be necessary to hire additional staff. In order to be effective at regulating virtual currencies, the SEC and related agencies will need new personnel to staff trading and markets divisions, cyber crime divisions, and other areas. For additional information on the status of virtual currency legislation, visit Reuters.com.