Getty ImagesAn official from one of the United States’ top financial regulators has told the BBC that the cryptocurrency industry is “rife with scams, liars and con artists”.
Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), said that “too much money has been lost by the global investing public” because cryptocurrency companies have not complied with the laws the agency is trying to enforce.
The industry is currently spending millions of dollars on political donations in an attempt to influence the outcome of the US election in November in the hope that the law will be more favorable in the future.
In addition to the presidential battle between Donald Trump and Kamala Harris, all 435 House districts are up for re-election, as are 33 of the 100 Senate seats.
Cryptocurrency is one of the world’s most controversial technologies, and there appears to be a clear divide between Donald Trump and the outgoing Biden administration over its future.
Trump has been working to win votes from cryptocurrency enthusiasts, promising to make the United States the “cryptocurrency capital of the world” and establish a “national strategic bitcoin reserve” similar to the U.S. government’s gold reserves.
This week he launched New Crypto Business The company is called World Liberty Financial, and while he provided few details, he said “I think cryptocurrency is one of the things we have to do.”
This is a sharp turnaround from three years ago, when he dismissed Bitcoin as ‘Looks like a scam’ And poses a threat to the US dollar.
Trump’s new enthusiasm stands in stark contrast to the Biden administration, of which Harris is vice president. In recent years, the White House has launched a sweeping crackdown on cryptocurrency companies.
In March this year, FTX founder and boss Sam Bankman-Fried Sentenced to 25 years in prison He was indicted for fraud in which he stole billions of dollars from clients around the world, many of whom are still trying to get their money back.
In April this year, Zhao Changpeng, the founder of Binance, the world’s largest cryptocurrency exchange, Four months imprisonment, The company paid a $4.3bn (£3.2bn) fine after admitting in a case brought by the US Department of Justice that it allowed criminals, child abusers and terrorists to launder money on its platform.
The SEC also has an ongoing case against Binance, one of 46 enforcement actions the financial regulator brought last year against companies seeking to profit from emerging technologies, a record high.
Getty Images“This is an area that has emerged where, just because they record their crypto assets on new accounting books, they [wrongly] saying ‘We don’t think we want to follow tried and tested law,’ ” Mr. Gensler said.
He explained that since the SEC’s inception, there have been rules that force companies that want to raise money from the public to “share certain information with them” in order to protect investors.
This happened in 1934, right after the infamous Wall Street Crash of 1929, which triggered the Great Depression.
“Cryptocurrency is only a small part of U.S. and global capital markets, but it has the potential to undermine everyday investors’ trust in capital markets,” Mr. Gensler said.
Although supporters argue that cryptocurrencies offer a fast, cheap and secure way to transfer money, a survey by the Federal Reserve, the U.S. central bank, found that the number of Americans using cryptocurrencies has declined. It fell from 12% in 2021 to 7% last year.
Harris hasn’t talked much about cryptocurrencies, but one of her advisers said last month that she would “support policies that ensure emerging technologies and industries like these can continue to grow.”
Recent meetings between her team and industry executives have been working to build trust and give cryptocurrency bosses hope that the future will be brighter no matter who wins in November.
“I can’t overstate the importance of this, not just for the United States but for the world,” said Paul Grewal, chief legal officer at cryptocurrency company Coinbase, who attended the meetings.
“Not only is the U.S. a significant market for cryptocurrency, but a lot of the important related technologies are being developed here. I think it’s also important that we not lose sight of the fact that the rest of the world is not waiting for the U.S. to take action.”
He added that given the tight race for the White House, “every vote counts, including the cryptocurrency vote.”
Getty ImagesThis year, the US crackdown on cryptocurrencies has also appeared in Europe. In April this year, the European Union Agree to the new law Trying to reduce the risk of cryptocurrencies being exploited by criminals.
Other regulators, however, have been slower to act. The G20’s major economies are working on minimum standards for cryptocurrencies, but they are not legally binding and have been slow to adopt.
In the United States, a bill to regulate cryptocurrencies Passed Passed by the House but not the Senate, the bill critics say would weaken consumer protections.
Mr. Grewal of Coinbase supported the bill and said: “This is not an industry that is avoiding regulation.” He added that the industry just wants the same standards applied to cryptocurrencies as other assets, “no stricter, but no weaker.”
With the U.S. election approaching in November, the cryptocurrency industry recognizes this is an opportunity to help elect lawmakers sympathetic to these businesses.
As of last month, the industry had spent an unprecedented $119 million in donations, According to research by the nonprofit civic organization.
Rick Claypool, the consumer advocacy group’s director of research, said the money was used “to help elect pro-crypto candidates and attack cryptocurrency critics, regardless of political affiliation.”
They spend more than any other industry in corporate donations as they “try to force Congress to yield to their demands for less regulation and weaken consumer protections,” he added.
