The cryptocurrency industry is “rife with fraud, hucksters, and grifters,” according to one of the top financial regulators in the United States. Gary Gensler, chair of the US Securities and Exchange Commission (SEC), told the BBC that the global investing public has lost significant amounts of money due to crypto companies not adhering to the laws his agency enforces.
This comes as the crypto industry pours millions into political donations ahead of the upcoming US elections in November, hoping to shape more favorable future laws. In addition to the presidential race between Donald Trump and Kamala Harris, all 435 House of Representatives seats and 33 of the 100 Senate seats are up for re-election.
The future of cryptocurrency is a divisive issue between Trump and the Biden administration. Trump has been courting crypto enthusiasts, promising to make America “the crypto capital of the planet” and proposing a “strategic national bitcoin stockpile.” He recently launched a new crypto business, World Liberty Financial, marking a significant shift from his previous dismissal of Bitcoin as a potential scam.
In contrast, the Biden administration, with Harris as vice president, has overseen a broad crackdown on crypto firms. Notably, Sam Bankman-Fried, founder of FTX, was sentenced to 25 years for fraud earlier this year, and Binance founder Changpeng Zhao received a four-month prison term alongside a $4.3 billion fine for allowing illegal activities on his platform.
The SEC has also taken record action against crypto firms, including ongoing cases against Binance. Gensler emphasized that crypto companies must follow the same time-tested laws as other financial sectors to protect investors.
While crypto supporters argue that the technology offers fast and secure transactions, a Federal Reserve survey showed that the number of Americans using cryptocurrency dropped from 12% in 2021 to 7% in 2022. Harris has not made clear statements on crypto, but her team has engaged with industry leaders, giving them hope for better prospects under the next administration.
The US crypto crackdown has been mirrored in Europe, where the European Union recently introduced new regulations to curb the criminal use of digital assets. However, progress has been slower elsewhere, with the G20 working on minimum crypto standards that are not legally binding. In the US, a bill regulating cryptocurrencies passed the House but stalled in the Senate, drawing criticism for potentially weakening consumer protections.
Coinbase’s chief legal officer, Paul Grewal, advocates for the bill and emphasizes that the crypto industry is not opposed to regulation but seeks fair and consistent standards. With the elections approaching, the crypto industry has spent a record $119 million in donations, aiming to support pro-crypto candidates and challenge critics, regardless of party affiliation. Rick Claypool of Public Citizen warns that this spending is aimed at weakening oversight and consumer protections.
Source: bbc.com
