Regulation
How the crypto industry circumvents regulation
photo by ArtRachel
A recent bill passed by the House of Representatives claims to regulate the cryptocurrency industry and protect consumers. But the bill is a Trojan horse designed by an industry flush with cash – the real Trojan horse.
THE Financial Innovation and Technology for the 21st Century Act is the cryptocurrency industry’s big attempt to curry favor with Washington. Simply put, this would exempt crypto assets and platforms from the definition of “securities,” meaning the Securities and Exchange Commission’s power to regulate crypto would significantly diminish.
The SEC has been a cornerstone of small investor protection since the 1930s, when it was created in response to the pre-Great Depression stock market crash. Instead, crypto wants to be regulated by the Commodity Futures Trading Commission, an obscure agency with far less ability to enforce the law.
The potential impact should not be taken lightly. THE The FBI reported in 2023, more than $4 billion has been lost to investment scams. Another recent report showed that over 90% of stablecoin transactions are fake. And the myth that crypto is a means of financial inclusivity is just that.
If there’s any industry that needs more oversight, not less, it’s crypto. But that’s not what the bill would do.
The crypto industry has consistently misled lawmakers in the process by using obscure crypto industry jargon and exaggerated promises of “innovation” to dress up policies that are simply new ways to avoid effective oversight and legitimize risky industry practices.
“This bill, if passed, would fill the so-called crypto regulatory void with a wrecking ball instead of a modest patch, damaging financial regulatory safeguards for all Americans, not just consumers of crypto,” said Mark Hays, senior policy analyst at Americans for Reform. Hay also fears The bill would also create a roadmap for other industries, including Wall Street, to escape regulatory oversight.
The outside money involved in passing this legislation highlights the ability of a deep-pocketed industry to corrupt the process. Crypto spent an incredibly large amount of money pressure And push the candidates to adhere to their political objectives in exchange for support. Crypto Super PACs have spent more than $100 million this cycle.
Lawmakers will no longer have consumers’ best interests at heart if they become captive to the crypto industry. But in the recent crypto vote, 71 Democrats, who are generally more skeptical than their Republican counterparts, joined with Republicans to help this bill pass the House. This shows the feed the lobby has on lawmakers despite opposition from consumer and worker groups, state regulators, several federal agencies and the Biden administration.
Voters will need to call on Congress to resist the urge to fall for false industry claims, flashy public relations and political pressure. Lawmakers should hold the industry to the same standards as everyone else. Why should crypto investors have less protection than others? The industry’s track record shows that it’s not a risk worth taking.