Key members of Congress say they are open to developing new rules to address the risks that have appeared in a turbulent cryptocurrency market, according to a report by Reuters.
“There’s no question about the fact that there is a need for a regulatory framework,” Sen. Mike Rounds (R-S.D.), a Senate Banking Committee member, told Reuters.
Congress has taken notice over the last 12 months as speculative trading, primarily in Bitcoin, has pushed values to astronomical levels. Bitcoin was valued at around $1,000 a year ago but surged to nearly $20,000 by mid-December.
It has since crashed to Earth, falling below $7,000 early this month, only to rally back to $11,000 over the weekend. Lawmakers and regulators are concerned that unwary investors could lose massive amounts of money if they buy at the wrong time.
International concerns
Internationally, regulators have raised concerns over how cryptocurrencies are being used. They say the digital currency could make it easier to launder money and raise capital to finance terrorist activities.
Political leaders in Germany and France have pushed to place the issue of cryptocurrencies on the agenda at the next G20 meeting.
Earlier this month, the Senate Banking Committee held a hearing on the world of cryptocurrencies and the oversight being provided by the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC). Committee chairman Sen. Mike Crapo (R-Idaho), said there is plenty to be concerned about.
“Much of the recent news about virtual currencies has been negative; between the enforcement actions brought by your agencies, the hack of the international Coincheck exchange, and the concerns raised by various regulators and market participants, there is no shortage of examples that increase investor concerns," Crapo said.
Crypto scams
Last week, the CFTC issued its first "pump and dump" advisory on digital currencies that warned consumers to be wary of schemes that promise huge returns by investing in cryptocurrencies.
"As with many online frauds, this type of scam is not new - it simply deploys an emerging technology to capitalize on public interest in digital assets," said CFTC Director of Public Affairs Erica Elliott Richardson. "Pump-and-dump schemes long pre-date the invention of virtual currencies, and typically conjure the image of penny stock boiler rooms, but customers should know that these frauds have evolved and are prevalent online."
Richardson warned that even experienced investors can become targets of professional con men who are experts at deploying seemingly credible information about investments in an attempt to deceive.