The cryptomarket has been experiencing high volatility in recent months. It has also been prone to risks such as scams, fraud, cyber attacks and price manipulation - mostly targeted towards crypto exchanges. Previously, government agencies have explored ways to identify risks related to cryptocurrency use in illegal activities.
At the beginning of 2018, New York Attorney General noted that crypto-exchanges are susceptible to manipulation and lack measures to safeguard consumers from these risks. Consequently, there have been calls for stricter regulation to curb this practice by various stakeholders.
In a bid to curb price manipulation in the cryptocurrency space, legislators introduced two bipartisan bills to the US Congress. The first bill, U.S. Virtual Currency Market and Regulatory Competitiveness Act of 2018, aims at identifying how price manipulation occurs to inform action on ways to prevent further manipulation.
On the other hand, the second bill, Virtual Currency Consumer Protection Act, 2018, seeks to compare crypto regulations in different countries with a view of identifying ways to grow the cryptomarket without stifling innovation in the country. The task of ensuring recommendations would be provided was left to the Commodity Futures Trading Commission (CFTC), which is responsible for regulating the futures markets.
Since regulatory clarity has been lacking in previous years, these bills will be crucial in determining how virtual assets will be handled in future and the response of both businesses and consumers.
The congressmen recognize that virtual currencies could promote economic growth in the country if they are properly regulated to safeguard the interests of consumers and investors. For Joseph Oreste, CEO of Qupon, the proposed legislations will go a long way in facilitating mass cryptocurrency adoption in the US.
He says, "I think the best part, about these two bills, is they signal to institutional investors and consumers that government is accepting cryptocurrency and actively looking for ways to contribute to its security and adoption. Creating consumer protections convey to the public that the technology is being monitored for bad actors and is therefore safe for use. Exchanges are the gateway to crypto and therefore a critical infrastructure to the technology. Regulation and oversight signal to institutional investors sufficient safeguards are being put into place to begin investing. The bills are exploratory, however it is another positive step in the right direction."
By safeguarding stakeholders from risks associated with cryptocurrencies, the proposed legislation will enhance trust among industry players and encourage the innovation required to improve financial sector infrastructure. It is expected that the cryptomarket will become steady that as more countries develop and implement clear regulations on cryptocurrencies extensively.
The ultimate goal is to make the US a leader in the cryptomarket by creating a clear path for cryptocurrencies in future. By improving its support for blockchain and cryptocurrencies, and providing clear regulations, the US is well on its way to providing an environment that will sustain crypto-related activities.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.