U.S. Senator Sherrod Brown, chairman of the Senate Banking Committee, has raised the possibility of a ban on cryptocurrency in the United States in order to address the various risks associated with the technology. In an interview with NBC’s Chuck Todd on Meet the Press, Brown highlighted concerns about Ponzi schemes, poor consumer protections, and national security threats, including the potential for use by “Korean cybercriminals,” “drug traffickers,” “human traffickers,” and terrorist organizations.
Brown disclosed that he had already asked the Treasury Secretary to conduct a government-wide assessment of cryptocurrency involving various regulatory agencies, including the Securities and Exchange Commission (SEC). He noted that the SEC had been particularly aggressive in its approach to cryptocurrency, but suggested that legislative action may also be required.
Despite these concerns, Brown acknowledged that a complete ban on cryptocurrency in the United States may not be practical due to the risk of driving the industry offshore. The Biden administration has taken a more regulatory approach to the cryptocurrency industry, prioritizing “responsible innovation.” Federal Reserve Chairman Jerome Powell has also stated that he has “no intention to ban” cryptocurrency.
More regulations needed after FTX scandal
Coinbase CEO Brian Armstrong has argued that the lack of strict regulations in the U.S. enabled the recent implosion of crypto exchange FTX to grow to such a significant size. Binance, the largest cryptocurrency exchange in the world by trading volume, has also faced criticism over its opaque operations in recent months.
Cryptocurrency has gained widespread attention and adoption in recent years, with proponents touting its potential to revolutionize financial systems and increase financial inclusion. However, the technology has also faced significant controversy and scrutiny, particularly in regards to its potential for use in illicit activities and the lack of regulation and consumer protections in the industry.
Ponzi schemes, in which earlier investors are paid with the investments of newer investors rather than actual profits, have been a particular concern in the cryptocurrency industry. These schemes often rely on the hype and speculation surrounding cryptocurrency to attract new investors, who may be unaware of the fraudulent nature of the scheme.
Consumer protections have also been a concern in the cryptocurrency industry, as investors have limited recourse in the event of fraud or losses due to technical issues or market fluctuations. There have also been instances of exchanges being hacked or otherwise misusing customer funds, leading to significant losses for investors.
National security risks
National security risks have also been cited as a concern in regards to cryptocurrency, as the technology can potentially be used to facilitate illicit activities such as money laundering, drug trafficking, human trafficking, and terrorist financing. These risks have led to calls for greater regulation and oversight in the industry.
Despite these concerns, many in the industry have argued against overly strict regulations that could stifle innovation and drive the industry offshore. Coinbase CEO Brian Armstrong has pointed to the dangers of pushing the industry abroad, stating that this is what allowed the recent implosion of FTX to grow to such a significant size.
Final Thoughts
In the face of these challenges, the Biden administration has taken a more regulatory approach to the cryptocurrency industry, focusing on “responsible innovation.” Federal Reserve Chairman Jerome Powell has also indicated that he has “no intention to ban” cryptocurrency. However, the possibility of a ban on cryptocurrency has been raised by U.S. Senator Sherrod Brown, chairman of the Senate Banking Committee, as a potential means of addressing the various risks associated with the technology.
