A Note by Amanda Holme
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At the Aspen Security Forum, Gary Gensler, chair of the SEC, compared the state of cryptocurrency regulation to the “Wild West,” noting its lack of investor protection.[1] Gensler has continued to repeat the “Wild West” metaphor when discussing the challenges and lack of cryptocurrency regulation, which leave individual investors and financial markets vulnerable to fraud.[2] Although the Internal Revenue Service (“IRS”), Financial Crimes Enforcement Network (“FinCEN”), Commodity Futures Trading Commission (“CFTC”), and U.S. Securities and Exchange Commission (“SEC”) have used existing laws to regulate cryptocurrencies, Congress has not enacted legislation specifically targeting them.[3] Currently, no single U.S. regulatory authority governs private cryptocurrency exchanges.[4] Since the majority of cryptocurrency activity occurs beyond the boundaries of government regulation, Gensler worries about the continued potential for crime, financial instability, and threats to national security.[5]
[1] Paul Kiernan, Crypto ‘Wild West’ Needs Stronger Investor Protection, SEC Chief Says, Wall St. J. (Aug. 3, 2021, 6:21 PM), https://www.wsj.com/articles/sec-will-police-cryptocurrencies-to-maximum-possible-extent-chair-gary-gensler-says-11628007567.
[2] SEC Chairman on New Regulations on Cryptocurrencies and Climate Risk, Wall St. J. (Dec. 12, 2021, 6:00 PM), https://www.wsj.com/articles/sec-chairman-on-regulations-on-cryptocurrency-and-climate-risk-11639165931.
[3] John Marinelli, Meet New Boss, Same as Old Boss: How Federal Agencies Have Leveraged Existing Law to Regulate Cryptocurrency, 57 Am. Crim. L. Rev. Online 34, 34 (2020).
[4] Kiernan, supra note 1.
[5] Id.