Since last year and the onslaught of the COVID pandemic, there has been a visible increase in the flow of cryptocurrencies among people around the world. At its peak last year, the total market cap of the cryptocurrencies market stood at $3 trillion with more than 4000 variants. Considering the massive expansion, it is no longer for the US regulatory agencies to ignore the market anymore.
The main financial agencies of the USA that are taking an increasing interest in regulating cryptocurrencies are CFTC, OCC, SEC, Federal Reserve, FDIC, and Department of Treasury are among the top candidates. The SEC chief Gary Gensler has made it clear that the prosecution will be working on creating more lawsuits this year to separate the digital stocks from digital tokens.
Regulatory Framework for Digital Currencies
Following the footsteps of the SEC, the CFTC has kept the tradition of bringing more lawsuits to the crypto corporations since 2015. The agency charged BitMEX for illegal Bitcoin derivatives to the public. Meanwhile, CFTC chairperson Rostin Behnam has recently submitted an appeal in the congress for $100 million funds for cryptocurrency monitoring purposes.
The Office of Comptroller of Currency or OCC has taken up the responsibility to determine the process of banks regulated under the Federal Reserve about how they can store cryptocurrencies on their balance sheets. The latest charter for the procedure manual was issued by the former OCC Brain Brooks in 2020. Brooks wrote a letter to the US national banking enterprises to grant them permission for crypto custodial services.
The Federal Deposit Insurance Corporation is responsible for monitoring the risk factor allocated into the investment products. Intrinsically, stablecoins possess a higher risk factor in comparison to USD-based investment products. The FDIC officials took note of the USDF stablecoin created with the affiliation of NY Community Bank, FirstBank Nashville, Sterling National Bank, and Synovus, among others, and the jury is still out on the matter.
Meanwhile, the experts claim that the Fed policies of tightening bond purchases have increased the volatility in the cryptocurrency markets. Meanwhile, US Treasury Department has repeatedly emphasized the involvement of threat actors in the cryptocurrency industry. The Financial Crimes Enforcement Network (FinCEN) is cooperating with the Treasure department to keep track of illegal activities sponsored by the blockchain networks. With time, the US regulatory agencies are likely to take an increasing interest in implementing stronger regulatory frameworks and sanctions on the nascent industry.