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House panel demands cryptocurrency fraud oversight

WASHINGTON — A RESIDENCE oversight subcommittee asked regulators and industry leaders on Tuesday to describe what they’re doing to avoid cryptocurrency fraud along with other scams perpetrated on consumers.

Illinois Rep. Raja Krishnamoorthi, head of the Economic and Consumer Policy subcommittee, asked leaders of the Treasury Department, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission to learn more on the steps they’re taking to curb the growth of fraud and consumer abuse associated with cryptocurrencies.

The inquiries come because the cryptocurrency market has seen immense volatility, as bitcoin lost nearly half its value at one point this season along with other cryptocurrencies fell a lot more.

Despite these vulnerabilities, the government has been slow to curb cryptocurrency scams and fraud. Existing federal regulations usually do not comprehensively or clearly cover cryptocurrencies under all circumstances,” reads one letter addressed to Treasury Secretary Janet Yellen.

Five of the largest cryptocurrency exchanges were also sent inquiry letters, requesting documents on company policies concerning the removal of fake accounts.

A written report on the impacts of cryptocurrencies along with other digital assets on financial markets and illicit finance is likely to be released in the coming weeks. In March, President Joe Biden issued an executive order calling for a number of agencies to check out methods to regulate digital assets and gave them 180 days to take action.

On Monday, the Federal Bureau of Investigation warned that criminals tend to be more frequently exploiting vulnerabilities on certain decentralized finance platforms to steal cryptocurrency.

Several major legislative proposals were offered in Congress this season aswell.

Sens. Debbie Stabenow, D-Mich., and John Boozman, R-Ark. have proposed a bill that could supply the regulatory authority over Bitcoin and Ether to the Commodities Futures Trading Commission. Stabenow and Boozman lead the Senate Agriculture Committee, which includes authority over CTFC.

In June, Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., proposed the Responsible Financial Innovation Act, which may create legal definitions of digital assets and virtual currencies; would require the IRS to look at help with merchant acceptance of digital assets and charitable contributions; and would create a distinction between digital assets which are commodities and the ones which are securities.

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