Last year was crucial for crypto. That is when everything really started to move downward (not just crypto price), with regulators eyeing crypto companies more closely than ever before. It’s no wonder this is happening. What Sam Bankman-Fried did to the crypto space and FTX left regulators no choice but to attack with all they’ve got.
Now even Massachusetts Senator Elizabeth Warren wants to ban the use of crypto wallets and rely on big banks. Yes, seriously. Even after all that happened lately with the downfall of Silvergate, Silicon Valley Bank, and other notable banks. On the other hand, SEC Chair, Gary Gensler, is facing scrutiny over crypto policies pointed out by Congress.
Elizabeth Warren wants tough crypto regulations
Warren is at it again, disparaging the crypto industry while advocating for greater reliance on large financial institutions. We witnessed how that paid out in recent month. A proposal Warren co-introduced with Kansas Senator, Roger Marshall, in December 2022, the Digital Assets Anti-Money Laundering Act, went nowhere and Warren vowed in February to revive it.
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Although the proposal’s claimed goal is to safeguard American consumers from scams, it is more likely to force crypto companies to relocate abroad and reduce customer options.
It forbids the use of digital asset mixers (e.g. Tornado Cash) and mandates that miners and validators along with self-hosted wallets implement Anti-Money Laundering (AML) standards. Many firms might not have the legal standing to apply such regulations, which would force them to discontinue serving customers in the US or go out of business entirely.
Her assertion that cryptocurrency is the method of choice for international drug traffickers and terrorists is categorically false. While between $800 billion and $2 trillion is laundered annually in fiat currency, only about $10 billion or less is involved in Bitcoin money laundering each year.
They couldn’t stop money laundering with the US dollar for decades, yet they try to stop “money laundering” through crypto, which is significantly smaller. The bill is especially burdensome for noncustodial and decentralized finance (DeFi) institutions, as it mandates the recording of user information and its submission to the authorities without a warrant or probable cause.
Among the many absurdities proposed is that software developers must register as money service providers, implement Anti-Money Laundering procedures, and report customers to the Financial Crimes Enforcement Network. If this law will pass, crypto will be under the toughest regulatory scrutiny ever, making it hard for crypto companies to flourish.
SEC Chairman to testify regarding his stance on crypto
Crypto is a wild west. It always has been. That is why regulators want to change that, as soon as possible. Crypto is in a similar state to the stock market in the 1920s when there was no SEC to watch out for insider trading or scams.
Read more: Bitcoin’s performance is better than almost all S&P 500 stocks in 2023
Gary Gensler, the chief of SEC, is about to testify in front of the House Financial Services Committee (HFSC) for the first time. In an interview, HFSC chairman, Patrick McHenry, revealed that the SEC chairman would be questioned on April 18th on the agency’s stance on the cryptocurrency industry.
#NEW: Chairman @PatrickMcHenry confirms @SECGov Chair Gary Gensler will testify before the House Financial Services Committee on April 18th.
Republicans will hold @GaryGensler accountable for his flagrant disregard for the law, jurisdiction, and the APA.
— Financial Services GOP (@FinancialCmte) March 28, 2023
Gensler’s policy decisions and crypto asset strategy will be the primary topics of discussion at the upcoming hearing. He continued by saying HFSC will have significant overall control of the SEC and would handle setting down a regulatory framework for digital assets.
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Many in the Democratic party have voiced concern over the years about the SEC chairman’s stance on cryptocurrencies. The party’s anti-crypto attitude has alarmed some in the crypto business, who fear it could hurt the party’s chances of winning the 2024 election.
Satoshi Action Fund co-founder, Dennis Porter, has stated that many pro-crypto and pro-Bitcoin Democrats are preparing to speak out against the party’s agenda.
“Democrats are on the verge driving their own voters away and losing support from this important new voter block. In my opinion it could cost Democrats the 2024 election,” Porter explained in a tweet.
Conclusion
The US has lagged behind on the issue of cryptocurrency regulation, in contrast to Europe and many other places across the world. Since 2020, the SEC has been fighting with Ripple, and the outcome of this case is widely anticipated to provide the groundwork for what is considered security in the United States.
Nevertheless, existing authorities have not provided a clear roadmap yet. The upcoming years will be crucial for the crypto space as serious regulatory measures should be put in place, taming the wild west of crypto.
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