The Government’s Arms Around Cryptocurrency: Hug or Stranglehold?

As the cryptocurrency industry grows, state and federal governments are considering how that industry should be regulated. The President has directed the Secretary of the Treasury to report soon on the issues involved. A draft bill that would regulate stablecoins has been released in the U.S. Senate. Meanwhile, states are competing with one another to adopt regulatory laws that may attract cryptocurrency firms to their welcoming, but taxing, arms striving for economic growth.

Will regulation be designed to avoid discouraging innovation in a highly creative environment? Fears have been expressed that unregulated cryptocurrency could theoretically present systemic risk, and consumers may need to be protected–particularly in light of the recent collapse of the Luna cryptocurrency and its related Terra stablecoin. Some believe that regulation may be an opportunity to include those presently unserved by the banking system. Complicating this already complicated picture may be rivalry among multiple federal agencies, including the banking regulators, the Securities and Exchange Commission, the Commodities Futures Trading Commission, and the Federal Trade Commission, each of which may make a case for potential authority over aspects of the cryptocurrency industry. Our panel of experts addressed these timely and controversial questions.

Douglas Elliott

Partner

Oliver Wyman


Michael Piwowar

Executive Director

Milken Institute Center for Financial Markets


Dawn Stump

Former Commissioner

Commodity Futures Trading Commission


Thomas Vartanian

Executive Director

The Financial Technology and Cybersecurity Center


Paul Watkins

Senior Advisor

Patomak Global Partners


Financial Services & Corporate Governance

Federalist Society’s Financial Services & E-Commerce Practice Group

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