By Spencer Mann, Assistant Trending Editor
Being the nation with some the most prominent financial markets in the world, the United States’ actions regarding cryptocurrency regulation may be a bellwether for the rest of the world. Currently, the United States has insufficient legislation constraining cryptocurrencies, both at the federal and state level. With a federal government seemingly unified against corporate regulation, it would make sense for this trend to continue. However, not all members of the government agree, especially among the regulatory agencies. The chairman of the Securities and Exchange Commission (SEC) stated last month that “Many ICOs [initial coin offerings] are being conducted illegally. Their promoters and other participants are not following our security laws.” Initial Coin Offerings are a method for companies to raise funds, as it issues its created cryptocurrency for a set price. These transactions are very speculative, as the coin differs from equity and debt. Instead, the value of the coins is based merely on supply and demand of the currency itself. According to The Verge, firms raised over $4 billion last year through this method.
While regulatory agencies may have been unsuccessful in curbing these transactions, their beliefs remain that these cryptocurrency deals violate necessary investment regulations set forth by the SEC and similar agencies. The US Senate shares the concern regarding the lack of regulatory enforcement. Besides the potential negative economic impact of this unregulated industry, many are concerned that these currencies are used for crime. Because of its anonymous nature, it is not traceable like many domestic and international currencies. Members of the Commodity Futures Trading Commission (CFTC) recently testified in front of a Senate committee, admitting to the lack of enforcement of financial regulation on the cryptocurrency realm. One noteworthy concession was that zero ICOs have been filed with the SEC. It appears that startups have found a loophole to the typically arduous IPO process.
South Korea performed a study that concluded that $600 million worth of financial crimes have been committed in which cryptocurrency was involved. The numbers are likely more abundant in the United States due to its bigger share of financial markets and overall economic activity. However, should the government continue its ways of inaction, it will remain difficult to quantify the effects of cryptocurrency on the United States economy.
A version of this article appeared in the Tuesday, March 20th print edition.
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