US Congress sets sights on federal cryptocurrency rules

US lawmakers on Capitol Hill are moving to consider new rules that could impose stricter federal oversight on the emerging asset class. (Reuters)
Updated 19 February 2018
0

US Congress sets sights on federal cryptocurrency rules

WASHINGTON: Jolted by the global investment craze over bitcoin and other cryptocurrencies, US lawmakers are moving to consider new rules that could impose stricter federal oversight on the emerging asset class, several top lawmakers told Reuters.
Bipartisan momentum is growing in the Senate and House of Representatives for action to address the risks posed by virtual currencies to investors and the financial system, they said.
Even free-market Republican conservatives, normally wary of government red tape, said regulation could be needed if cryptocurrencies threaten the US economy.
“There’s no question about the fact that there is a need for a regulatory framework,” said Republican Senator Mike Rounds, a Senate Banking Committee member.
Digital assets currently fall into a jurisdictional gray area between the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Treasury Department, the Federal Reserve and individual states.
Much of the concern on Capitol Hill is focused on speculative trading and investing in cryptocurrencies, leading some lawmakers to push for digital assets to be regulated as securities and subject to the SEC’s investor protection rules.
“The SEC is properly the lead on the issue,” said Republican Representative Bill Huizenga, chairman of the House Financial Services Subcommittee on Capital Markets which will hold hearings on the issue in coming weeks.
Huizenga said the recent growth of the virtual currency market had made him more comfortable with more oversight. “Six months ago, we didn’t see this explosion. The marketplace has changed,” he said.
Carolyn Maloney, a Democratic senior member of the House Financial Services Committee, is another lawmaker advocating for direct oversight of digital assets by the SEC.
“A lot of people don’t realize there’s nothing backing these virtual currencies,” she said.
Virtual currencies have existed for years but speculation in them has recently ballooned, along with scams promising investors returns of over 1,000 percent in weeks.
In a time of volatile markets, hackers are also active in the sector, stealing $530 million of digital currency from Japanese exchange Coincheck last month.
Bitcoin, the best known virtual currency, lost over half its value earlier this year after surging more than 1,300 percent.
“We have to look carefully at all of the cryptocurrencies and make sure individuals don’t get taken advantage of,” said Representative Tom MacArthur, a House Financial Services Committee Republican.
Regulators globally have raised the alarm over cryptocurrencies, saying they may aid money laundering and terrorist financing, hurt consumers and undermine trust in the global financial system.
France and Germany want cryptocurrencies on the agenda for the upcoming G20 meeting of the largest advanced and developing economies.
Conservative Republicans also recognize the potential for broader risks.
“I’m a total free-marketer, so I don’t want to regulate,” said Republican Representative Dave Brat, a member of the conservative House Freedom Caucus.
“But if it’s a currency that could destabilize the whole economy, you’re going to have that conversation,” he said.
The SEC and CFTC chairmen recently called for greater scrutiny of digital assets before the Senate Banking Committee. Members of the panel said the regulators will return to discuss how to move forward.
While many lawmakers agree tighter oversight is needed, there is no consensus yet in Congress on how to proceed.
While some lawmakers say speculative investments should be classed as securities, others want digital currency transactions regulated as commodities.
The SEC is already cracking down on transactions known as initial coin offerings (ICOs), while the CFTC has identified digital assets as a commodity subject to its anti-fraud rules.


Iran rial plunges to new lows as US sanctions loom

Updated 24 min 43 sec ago
0

Iran rial plunges to new lows as US sanctions loom

  • The dollar was being offered for as much as 87,000 rials, compared to around 75,500 on Thursday
  • The currency has been sliding for months because of a weak economy

DUBAI: The Iranian rial plunged to a record low against the US dollar on the unofficial market on Sunday, continuing its slide amid fears of returning US sanctions after President Donald Trump in May withdrew from a deal on Tehran’s nuclear program.
The dollar was being offered for as much as 87,000 rials, compared to around 75,500 on Thursday, the last trading day before Iran’s weekend, according to foreign exchange website Bonbast.com, which tracks the unofficial market.
Iran’s semi-official news agency ISNA said the dollar had climbed to 87,000 rials on Sunday from about 74,000 before the weekend on the black market, and several Iranian websites carried similar reports.
The currency has been sliding for months because of a weak economy, financial difficulties at local banks and heavy demand for dollars among Iranians who fear the pullout by Washington from the nuclear deal and renewed US sanctions against Tehran could shrink the country’s exports of oil and other goods.
The fall of the national currency has provoked a public outcry over the quick rise of prices of imported consumer goods.
Merchants at the mobile phone shopping centers Aladdin and Charsou in central Tehran protested against the rapid depreciation of the rial by shutting down their shops on Sunday, the semi-official news agency Fars reported.
A video posted on social media showed protesters marching and chanting “strike, strike!” The footage could not be authenticated independently by Reuters.
Hours later, Information and Communications Technology Minister Mohammad Javad Azari-Jahromi said on Twitter that he visited the protesting merchants.
“I will try to help provide hard currency for (mobile) equipment (imports),” Azari-Jahromi wrote, adding: “The merchants’ activity has now gone back to normal.”
Some of the US sanctions against Iran take effect after a 90-day “wind-down” period ending on Aug. 6, and the rest, most notably on the petroleum sector, after a 180-day “wind-down” period ending on Nov. 4.
The rial has weakened from around 65,000 rials just before Trump’s announcement of the US withdrawal in early May, and from 42,890 at the end of last year — a freefall that threatens to boost inflation, hurt living standards and reduce the ability of Iranians to travel abroad.
In an effort to halt the slide, Iranian authorities announced in April they were unifying the dollar’s official and black market exchange rates at a single level of 42,000, and banning any trade at other rates under the threat of arrest.
But this step has failed to stamp out the unofficial market because authorities have been supplying much less hard currency through official channels than consumers are demanding. Free market trade simply went underground, dealers said.