Over the last few years, banking and financial regulators have been trying to figure out how to handle cryptocurrencies. In this article, you will take a look at some of the obstacles that have prevented the U.S. from regulating cryptocurrencies so far and see if there’s any hope for future crypto regulation in America.
Cryptocurrencies Are Not Considered Securities
First of all, cryptocurrencies are not considered securities because they are not regulated by the SEC. Cryptocurrencies are also not regulated by any other federal agency or authority, including FINRA (Financial Industry Regulatory Authority), CFTC (Commodity Futures Trading Commission), OCC (Office of Comptroller of Currency), and FDIC (Federal Deposit Insurance Corporation).
The SEC defines financial security as any note, stock certificate, bond, or similar instrument that represents ownership in a company or corporation. This means that cryptocurrencies don’t meet this definition since they don’t represent ownership in any company or corporation. Rather, they’re digital currencies used for payments and transfers across peer-to-peer networks without middlemen, like banks or credit card companies.
Cryptocurrencies Have Not Been Used To Commit Fraud
As of now, cryptocurrencies are not regulated because they are not considered securities. They mainly use decentralized control for money operations, as opposed to centralized electronic money and central banking systems.
Cryptocurrency is not considered a security because there is no central authority or person who can issue new units or regulate its supply. This means no one can manipulate the price through buying and selling like you would with stocks or other investment products.
Regulating Cryptocurrencies Would Be Difficult
Concerns over the lack of regulation in the cryptocurrency market have been raised by several government officials, including Federal Reserve Chair Jerome Powell and U.S. Treasury Secretary Steven Mnuchin.
While some countries have begun to regulate their own cryptocurrencies, many others are still weighing their main options on how best to deal with this new financial system that has emerged alongside traditional currencies like dollars and euros.
Regulating Cryptocurrencies Would Be Expensive
Lastly, cryptocurrencies are primarily decentralized, so it’s pretty difficult for governments to do some systemic and effectivecrypto regulation. Most countries don’t even try because of the cost and difficulty involved. Regulating cryptocurrency trades would require setting up an extensive system of licensing, reporting requirements, and enforcement mechanisms–all at great expense.
When Will The U.S. Officially Regulate Cryptocurrencies?
Cryptocurrencies are still a new technology and there is much debate about whether or not they should be regulated. The cryptocurrency community believes that regulation could stifle innovation, while critics worry about scams and fraudsters using cryptocurrencies to exploit investors. In the end, though, it seems unlikely that the U.S. will regulate cryptocurrencies anytime soon–or ever.