U.S. Discussing New Crypto Regulations
Governments worldwide have been looking into ways of regulating the crypto market. The U.S. has been lagging behind other countries when it comes to cryptocurrency regulations. Some of the other countries who have been talking heavily about regulations include Turkey, Indonesia, Argentina, Russia and South Africa.
However the new Biden administration is now eyeing the way at potentially taking more of a lead role when it comes to crypto regulations. This comes as crypto market volatility soars.
According to some reliable sources, the White House has been evaluating the existing rules regarding cryptocurrencies. This will help reveal gaps in the market that the existing regulations have not yet covered.
As with most regulations administration officials say that new rules are necessary to protect investors from market crashes such as the ones that have been witnessed in recent weeks. The latest wave of market volatility is why the Biden administration is looking for tougher measures.
In an article in the Washington Post, White House officials unsurprisingly used the same reasons they always use to control certain areas ‘it’s for our protection.’
The revealed that they were looking into various digital assets, including Bitcoin and how these assets can be used for terrorism financing because of their anonymous nature. The new regulations will also help evaluate how retail investors could be protected from the regular price fluctuations in the crypto market.
Just last week, Bitcoin crashed to its deepest low this year and went to below $30,000. This created a panic wave as investors tried to sell off their holdings to avoid incurring more losses.
During this time the crypto market shed more than $1 Trillion in value in ten days.
Proposed Crypto Regulations
The U.S. Treasury has proposed new regulations regarding the crypto market to help curb the current loopholes. One proposal states that crypto holders need to report transactions worth more than $10,000 to the Internal Revenue Agency. This proposal was likely one of the many factors that caused the decline in the crypto market’s value.
The second proposal is for the IRS to increase its workforce to have more coverage of the crypto market. The workforce is expected to be doubled in the next ten years, raising concerns among investors. The crypto community now believes that the United States is losing its touch as a hub for digital assets because of the new regulations.
Currently, federal lawmakers do not consider the current fluctuations in the market as a cause for concern regarding financial stability. According to the report in Washington Post, the relevant government authorities were aware that the market volatility was a looming threat that needed to be dealt with. However, the administration was speculating for the long term about how this market will perform before making a conclusive stand.
When the crypto market was performing at its best, the total market capitalization stood at $2.6 Trillion, significantly higher than what was reported in the traditional financial sector.
However, the success of the crypto market and its incredible growth pose a risk to the already existing financial systems. This means that this is not the end of regulations because governments will continue looking for ways to tame the market.