American and Swedish financial authorities indicated they would impose severe measures to regulate the currently largely independent cryptocurrency markets. Both countries agreed that the new crypto technology is missing a consistent structure and that crypto exchanges already posed a financial crime threat for consumers.
According to the acting Comptroller of the Currency, Michael Hsu, US agencies should start organizing the cryptocurrency market by setting a “regulatory perimeter” for cryptocurrencies.
Like the US government, the Swedish central bank announced its intention to crack down on the crypto exchange platforms. Stefan Ingves, the governor of the Swedish central bank, said that Bitcoin and other cryptocurrencies would be regulated with stricter measures. He also noted that “consumer interest and money laundering” are involved with how these exchanges are currently run. Asa Lindhagen, Sweden’s Minister for Financial Markets, said that the country has already started suppressing crypto exchanges, working together with other governments around the world to resolve the money laundering issues.
Recently, several UK banks, including Monzo, Starling, and Barclays, allegedly blocked payments to crypto exchanges. The suspension happened due to the “high levels of suspected financial crime with such payment.”
The Chinese government is developing its own digital currency, as is Sweden. Nonetheless, in May 2021, China cracked down on financial institutions trading in cryptocurrencies, leading the market to contract by 30%.
It’s evident that governments and financial regulators worldwide are currently looking for the best way to implement the necessary safety measures on cryptocurrency exchanges. The justification for such regulatory measures is the high volatility of cryptocurrency, particularly Bitcoin, coupled with its ever-growing popularity – more and more people now have Bitcoin wallets – and its availability to bad actors.
Gary Gensler, Chairman of the US Securities and Exchange Commission in Biden’s Administration, said that a new law that controls crypto exchanges is needed. He emphasized that the illegal activities and money laundering enabled by unregulated crypto trading are the two main concerns of the Treasury department. Biden’s new tax-enforcement measures, meant to help fund the American Families Plan, also include new rules regarding cryptocurrencies and registering income from such sources.