Cryptocurrency markets are riddled with fraud, failure to comply with existing laws, and high swings in volatility, according to a report released on Friday by the Treasury Department’s Financial Stability Watchdog, while the recent collapse of digital currency exchange FTX , has not impeded the broader financial system. Commission.
“FTX is a shock to the market,” said a Treasury Department official, adding that the bankruptcy underscores the commission’s concerns over cryptocurrencies highlighted in a report released in October.
A commission set up to identify looming risks to the financial system after the financial crisis calls on Congress to pass legislation that would allow U.S. regulators to crack down on spot markets for crypto assets that are not securities. repeated.
The council also said lawmakers should address regulatory rulings when companies take advantage of more favorable or lighter regulations in multiple jurisdictions to avoid tighter scrutiny in the United States. I was.
The group uses data from agencies such as the Consumer Financial Protection Agency, the Federal Trade Commission, and the Securities and Exchange Commission to spot cryptocurrency fraud. Of his 8,300 cryptocurrency complaints received by the CFPB’s Consumer Complaints Database from October 2018 to September 2022, 40% were deemed “scams or scams.”
According to the FTC, between January 1, 2021 and March 31, 2021, more than 46,000 people lost more than $1 billion to fraud and fraud trading cryptocurrencies.
Since fiscal year 2019, the SEC has received over 23,000 information, complaints and referrals regarding the cryptocurrency market.
However, while FTX’s failure “plunged the price of Bitcoin and other crypto assets,” the current regulatory framework “has limited impact on the broader U.S. financial system,” the report said. the book says.
The Commission warned that this could change rapidly if cryptocurrencies and participants in the traditional financial system continue to devise ways to overlap, thus increasing the urgency of more regulatory oversight. It is rising.
For example, traditional banks hold stablecoins as part of their reserves, retail investors are increasingly using leverage to trade cryptocurrencies, and crypto is part of traditional finance. It is becoming more widely available through service companies. Stablecoins are considered a low-risk type of cryptocurrency as they seek to reduce price volatility by deriving their value from a fixed traditional currency or commodity such as the US dollar or gold.
“Such interconnections will magnify the impact of shocks occurring within the digital asset ecosystem,” said the report.
