Five large cryptocurrency exchanges, Binance.US, Coinbase, FTX, Kraken, and KuCoin, have been asked to explain the steps they are taking to protect customers from consumer fraud and scams to Congress.
“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in,” wrote Rep. Raja Krishnamoorthi (D-Ill.), chair of the House Subcommittee on Economic and Consumer Policy. “The lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions, and the limited understanding many consumers and investors have of the underlying technology make cryptocurrency a preferred transaction method for scammers.”
While those five exchanges were singled out, Rep. Krishnamoorthi’s letter didn’t suggest there was any reason for including them, although their size and prominence would be a likely answer.
They were all asked to explain how they combat crypto-related scams and fraud, and how they identify and remove fraudulent assets. They were also for all documents detailing their documents setting out Binance’s policies governing cryptocurrencies, cryptocurrency traders, buyers, sellers, investors, consumers, or any other individual or entity using Binance’s product.
In addition, the Treasury Department, Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), and Federal Trade Commission (FTC) were all asked about the roles they play, tools they have to regulate crypto, as well as what should be done and to explain interagency cooperation.
Meanwhile, the SEC doubled down on its campaign to see almost all cryptocurrencies treated as securities, asking Grayscale Investments to explain why they do not see three of the smaller cryptocurrencies they hold, these are Stellar’s lumens, as well as privacy coins Zcash and Horizen.
Japan loosens, Singapore tightens
Japan’s Financial Services Agency is calling for looser corporate tax rules for crypto-asset issuers, proposing the elimination of a 30% tax on unrealized, paper gains on cryptocurrencies they retain after issuing a new token. It also proposing increased support for a program of tax breaks for individual crypto investors.
Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), meanwhile, warned that consumer remain “irrationally oblivious about the risks of cryptocurrency trading,” as they pursue “the prospect of sharp price increases in cryptocurrencies.”
In a speech on Monday (Aug. 29), he added that Singapore is considering “adding frictions” to the process of purchasing cryptocurrencies at the retail level, possibly including “customer suitability tests and restricting the use of leverage and credit facilities for cryptocurrency trading.”
Given the “borderless” world of crypto, however, he said banning it would be pointless.
Around the World
With the EU’s Markets in Crypto Assets (MiCA) legislation looking likely to take effect in 2024, crypto a growing number of crypto firms including the FTX exchange and U.K. crypto bank Revolut are turning to Cyprus’ Securities and Exchange Commission (CYSEC), which can license them across the European Union as well as the European Economic Area (EEA) which includes Iceland, Liechtenstein and Norway. Other big players including the Crypto.com exchange and crypto, fractional stock, and commodities exchange BitPanda have obtained CYSEC licenses.
The Bank of Korea is calling for an end to the country’s Financial Services Commission’s five-year-old ban on initial coin offerings (ICOs), which blockchains use to fund development by preselling native tokens. Calling the ban ineffective, the central bank said the creation of a regulatory regime would be preferable.
Paraguay’s President Mario Abdo Benítez on Monday vetoed a bill that would, among other things, have regulated Bitcoin-style cryptocurrency mining in the country, where it is currently banned, Decrypt reported, saying the gains did not outweigh the costs.
“Fixed mining of virtual assets requires the use of intensive and massive electrical energy and great capacity of energy production, which the country has,” the veto message said. “Nevertheless, it does not generate a lot of labor like any other sector industry.”
Afghanistan’s Taliban regime has cracked down hard on crypto, with authorities arresting a number of dealers who refused to follow a nationwide ban imposed by the central bank earlier this month. Cryptocurrencies have become an increasingly popular way to preserve wealth, protect it from the Taliban, and move money in and out of the country, which is under international sanctions, Bloomberg reported on Friday (Aug. 26).
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