United States Secretary of the Treasury, Steven Mnuchin, is said to be taking the lead on coordinating government agencies to work towards federal regulation of cryptocurrencies, according to CNN. This, of course includes bitcoin; the first decentralized digital currency that has intrigued both the technological and financial realms. On Tuesday, the Senate Banking Committee met to discuss this development, with Chairman Jay Clayton and Chairman Christopher Giancarlo - of the Securities and Exchange Commission and the Commodity Futures Trading Commission, respectively - testifying that they will "not ignore" the growing sector of financial interest. The testimony also aimed to educate senators on terms central to cryptocurrency, such as "initial coin offerings" and "blockchain" technology. As TechCrunch reports, this hint of openness and optimism may come as a pleasant surprise to bitcoin users, who have recently faced plunging prices with the currency.
In the past few weeks, the value of bitcoin has dropped by half and fluctuated greatly, despite its 2000% surge over the course of 2017. Yet, the fact that ICOs have generated $4 billion for projects that utilize blockchain technology is not lost on the financial regulatories (CNBC). In mid-January, Treasury Secretary Mnuchin announced that the department's Financial Stability Oversight Council formed a virtual currency working group, according to CoinDesk. In his speech, the motivation behind understanding and eventually regulating cryptocurrency was straightforward: Mnuchin wants to ensure that "bad people" cannot use bitcoin for illegal practices such as money laundering.
However, on Tuesday he ensured the Senate that he does now view virtual currency as a meaningful threat to stability of the financial market. "We are going to be coordinating our various responses. It's begun with just some broad conversations just establishing our different jurisdictions so we're all clear as to what we're doing, and what we're not doing, where the gaps are," Charman Giancarlo reported to CNBC. Chairman Clayton added that working group "may be back with our friends from Treasury and the Fed to ask for additional legislation," in regards to requesting government help on getting regulations in place.
While concentrated efforts on cryptocurrency regulation are certainly growing, the American Banker assesses that it is unclear at this point whether or not the American government has enough regulatory authority to actually handle issues within this emerging international sector. For the governments of China, India, and South Korea, this poses a potential threat to their efforts in defusing cryptocurrency markets, according to Investors.com. Treasury Secretary Mnuchin has also announced that he plans to bring the conversation of regulation to the upcoming G20 summit, being held this March in Argentina. For now, it is fair to say that the American government is increasingly accepting the idea of cryptocurrencies and their validity - as well as their own potential role in shaping the future of this sector.