American And Swedish Authorities Signal Stricter Crypto Oversight

June 1, 2021

Michael Hsu, the new acting comptroller of the currency, told the Financial Times he wanted U.S. agencies to coordinate and set a “regulatory perimeter” for cryptocurrencies and take a more active role regulating the market, something he said there was appetite for.

On Monday, the governor of Sweden’s central bank, Stefan Ingves, told Bloomberg stricter regulation is likely on the horizon for bitcoin and other digital assets, particularly when the market is so large that “things like consumer interest and money laundering come into play.”

Specific oversight will likely “come at different times in different areas,” Ingves said.

Asa Lindhagen, Sweden’s financial markets minister, told Bloomberg the country is already in the process of cracking down on exchange platforms and working with other regulators around the world to tackle the issue of money laundering.

Lindhagen said the international efforts are a “work in progress,” though emphasized the cross-border dimensions inherent in financial crime.

A number of banks in the U.K.—including Starling, Monzo and Barclays—have reportedly suspended payments to cryptocurrency exchanges in recent weeks in order to address “high levels of suspected financial crime with such payment,” according to The Telegraph.

The extreme volatility of the cryptocurrency markets, high risks of financial crime, and fast-growing popularity have prompted financial regulators worldwide to consider how best to implement necessary safeguards into the digital ecosystem without stifling innovation. Like Sweden, China is developing its own digital currency—cracked down on financial institutions trading in digital assets in May, contributing towards a rapid market contraction of nearly 30%. The Biden Administration is actively looking into “gaps” in crypto oversight and the SEC chair, Gary Gensler, recently told a House committee that there was a potential need for dedicated legislation governing crypto exchanges. Money laundering and illicit activities are a focus for the Treasury department’s crypto efforts, he said.

In a May congressional testimony, Hsu said he felt “déjà vu” with respect to today’s enthusiasm for financial innovation and the years preceding the financial crisis. The novel tools being developed “bring great promise… but also risks,” he said.

President Biden’s tax enforcement plan, which will help fund his American Families Plan, accounts for the crypto boom. It expands reporting measures for financial movements to crypto platforms in order to detect unreported income.

Source: Forbes
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