By Michael B. Cohen
Vice President of Global Operations
MyChargeBack
Criticism of proposed crypto regulation arose from unexpected quarters as senior Democratic Senator Ron Wyden of Oregon, chair of the Senate Finance Committee, urged caution with the proposal of crypto regulation.
In an interview focusing on crypto regulation with The Financial Times, Senator Wyden said, “There is obviously a debate but I want to be on the side of the innovator. When I think about crypto, I think about remittances or somebody who has a kid, 1,000 miles away and wants to get them help in an emergency, rather than going through scores of banks and credit card companies.”
What may be surprising is that Wyden is a Democrat, a party that is often supportive, rather than critical of financial regulation. In addition, Senator Wyden’s remarks come at a time when there have been calls for increased oversight of the blockchain, given the suspicion that Russian oligarchs will attempt to skirt sanctions, and due to the rise of crypto fraud.
Given Senator Wyden’s position on the Senate Finance Committee, are his remarks an indication of any softening on the U.S. government’s stance on imposing crypto regulation, or is he simply soothing the fears of the crypto fans in his constituency?
Crypto Regulations: Speak Softly and Carry a Big Stick
“Speak softly and carry a big stick” was a euphemism for President Theodore Roosevelt’s foreign policy, but there is an analogy that can be drawn between that president’s zeal for anti-trust regulation over a century ago and the desire to tame the wild frontier of the blockchain today.
It could be that Senator Wyden’s remarks are meant to reassure cryptocurrency users that their new frontier will not be altered beyond recognition with new rules and regulations. There is no doubt that the U.S. government is invested in cracking down on crypto frauds and launching numerous investigations, given the newly formed cryptocurrency enforcement team, started by the Department of Justice (DoJ).
There is a need to allay fears among cryptocurrency users who sought digital currencies as a safe haven to escape the bureaucratic red tape involved with traditional banking. Also, there is a reluctance among politicians to seem out of touch with what has been called the future of money.
Taking Senator Wyden’s remarks in the context of developments and proposals regarding regulations of cryptocurrencies domestically and abroad, it is apparent that leaders are trying to hit the right note with voters while taking action that could police crypto activities.
A New Phase of Crypto Investigation
In mid-February, the DoJ announced the creation of a special unit designed to investigate cybercrimes. This need arose as crypto frauds robbed $14 billion from consumers worldwide. Even prior to Russia’s invasion of Ukraine, the U.S. and other countries experienced ransomware attacks and an increase in financial fraud that seemed to have been based in Russia.
This signals a positive development for victims of cyber fraud since the involvement of government agencies and law enforcement in crypto investigations can more easily lead to criminal prosecution for fraudsters.
If You Can’t Beat Them Join Them
President Biden has signed an executive order that would involve financial regulators in analyzing the risks and benefits of cryptocurrencies. The proposal implies a commitment to take action against the growing tide of crypto crimes, with the openness to adopting cryptocurrencies into the mainstream, perhaps even creating a U.S. government-backed digital currency.
Although the Federal Reserve indicated that it had not adopted a policy yet to create a U.S, digital currency, many experts on trade feel that the eventual creation of a U.S. central bank digital currency is inevitable.
What the Government’s Regulation and Embrace of Digital Currency Means for Consumers?
What this development can mean for consumers is that, like the internet, which began as an unregulated jungle, cryptocurrencies may someday become a way of life.
The twin swings to regulation and wider adoption could lead to greater security for customers and more reliable opportunities to approach the blockchain safely.
Increased government involvement in crypto investigations also means that those who have been victims of cyber fraud have a better opportunity than ever to ensure their complaints are heard and that crypto investigations can yield fruit.
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