Rep. Raja Krishnamoorthi, D-Ill., Chair of the House Subcommittee on Economic and Consumer Policy, sent letters to four Federal agencies and five digital asset exchanges on August 30 to gather information on actions they’re taking to combat cryptocurrency-related fraud and scams.
The House lawmaker sent letters to the U.S. Department of Treasury, Securities and Exchange Commission, Commodity Futures Trading Commission, and Federal Trade Commission, along with letters to private firms Binance.US, Coinbase, FTX, Kraken, and KuCoin.
“As stories of skyrocketing prices and overnight riches have attracted both professional and amateur investors to cryptocurrencies, scammers have cashed in,” the congressman said.
“The lack of a central authority to flag suspicious transactions in many situations, the irreversibility of transactions, and the limited understanding many consumers and investors have of the underlying technology make cryptocurrency a preferred transaction method for scammers,” wrote Chairman Krishnamoorthi. “For all these reasons, I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies.”
Rep. Krishnamoorthi said existing Federal regulations do not “comprehensively or clearly cover cryptocurrencies,” and said congressional action may be needed to prevent consumers from fraud.
As for the crypto exchanges, the lawmaker said many exchanges fail to review cryptocurrencies before listing them, implement sufficient security measures, or appropriately monitor accounts to flag illicit activity. Rep. Krishnamoorthi called on the entities to take further action to “create safer environments for consumers.”
Additionally, he called on the agencies and crypto exchanges to both provide a number of documents and answers to a series of questions regarding crypto security to the subcommittee by September 12.
Many lawmakers have introduced legislation to try and provide regulatory clarity on the growing cryptocurrency and blockchain industries. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wy., introduced legislation in June that aims to create a complete regulatory framework for digital assets.
More recently, Sens. Debbie Stabenow, D-Mich., Cory Booker, D-N.J., John Boozman, R-Ark., and John Thune, R-S.D., introduced legislation on August 4 that would create commodities-type regulation of some digital assets.
Consistent with Rep. Krishnamoorthi’s concerns regarding crypto scams, Sen. Elizabeth Warren, D-Mass., said she plans to soon introduce new legislation aimed at combating cryptocurrency and digital asset scams aimed at novice investors.