Last week the House Committee on Oversight and Reform sent letters to four regulatory agencies: the Department of the Treasury, the Federal Trade Commission, the Commodity Futures Trading Commission, and the Securities and Exchange Commission, requesting information and documents relating to their efforts to safeguard consumers against cryptocurrency-related fraud. Similar letters were sent to five digital asset exchanges: Coinbase, FTX, Binance.US, Kraken and KuCoin.
In the letters, the committee is requesting that the exchanges produce documents showing efforts to “identify, investigate, and remove or flag potentially fraudulent digital assets or accounts.” The letters also appear to be interested in efforts made by the exchanges to vet digital assets prior to listing them. The letter requests that the exchanges submit their responses by September 12, 2022.
We have recently seen an uptick in both regulatory action and criminal investigations in the digital assets space. This letter from a congressional committee signals the government’s ongoing interest and the potential for increased legislative and regulatory action. There is no doubt that a more comprehensive approach to digital assets is necessary. As noted by Congressman Raja Krishnamoorthi, Chair of the Subcommittee on Economic and Consumer Policy, “without clear definition and guidance, agencies will continue their infighting and will be unable to implement consumer investor protections related to cryptocurrencies and the exchanges on which they are traded.” While the Congressman’s comments have some merit, perhaps, more importantly, the regulatory agency infighting and lack of guidance he references will deter legitimate investors from operating in this space and potentially subject them to unwelcomed, unnecessary, and burdensome scrutiny.
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