Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), recently highlighted the importance of requiring federal regulators to be ready to protect customers against bad actors in the cryptocurrency industry.
The statement was done during the 2021 Financial Industry Regulatory Authority (FINRA) annual conference, one of the premier events regulators and other financial service professionals to discuss matters of compliance and regulation concerning the financial industry.
Gensler referred to the increasing popularity of the Fintech and Cryptocurrencies industry by stating:
“As we continue to stay abreast of those developments, the SEC and FINRAshould be ready to bring cases involving issues such as crypto, cyber, and fintech. We need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently.”
The recently appointed Chairman was already in charge of the regulator when it issued a warning on May 11 for mutual funds trading Bitcoin futures about the high volatility and increased monitoring by the institution over the industry.
Experts have considered the statement as a sign of the increasing importance that president Biden’s administration is giving to protecting consumers of the uncertainty the crypto industry brings to the table.
New IRS Tax Plan Will Further Affect Crypto Investors
A new report released by the United States Treasury Department on May 20th outlines the new administration’s plans to require businesses to report all cryptocurrency transfers of more than $10k to the Internal Revenue Service (IRS).
The report stated that:
“Within the context of the new financial account reporting regime, cryptocurrencies and crypto asset exchange accounts and payment service accounts that accept cryptocurrencies would be covered. Further, as with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported on. Although cryptocurrency is a small share of current business transactions, such comprehensive reporting is necessary to minimize the incentives and opportunity to shift income out of the new information reporting regime.”
Concerns about the added difficulty of detecting illegal activity such a tax evasion in the crypto market are also noted in the report, which has been one of the major concerns for the IRS and United States Department of Justice over the past months.
Both entities have recently launched probes into the business models of cryptocurrency exchanges like Binance, Coinbase, and Kraken, which are just part of a larger trend displayed by regulators to create a legal framework for the growing crypto industry.
Experts’ Concerns About SEC’s Overreach Are on the Rise
The increasing efforts by the SEC to regulate the cryptocurrency industry over the past months have caught the attention of crypto supporters, financial institutions, and policymakers, with some of them worrying about the entity’s overreach via a poorly defined legal framework.
Starting with the lawsuit filed against Ripple back in December of 2020, new lawsuits and steps have put into evidence conflict of interest between previous officials of the SEC when it comes to regulating crypto.
XRP investors have been one of the most vocal critics of the lawsuit against Ripple, claiming that the SEC is not acting in their best interest as it claims. In fact, they organized themselves to file a motion to intervene which was later approved by the court handling the case.
John E. Deaton, the attorney representing XRP investors, referred to the former SEC Chairman’s decision to authorize the lawsuit during his last day by calling it a “corrupt intent”.
Clayton was hired by River Digital Asset Management soon after he left the SEC, which could spell trouble as the company highly benefited from the lawsuit’s impact on the market.