WASHINGTON — A subcommittee chairman on the House Oversight Committee requested information from digital asset exchanges and U.S. financial regulators on Tuesday, the latest call for the crypto sector as well as its overseers to better protect consumers from fraud.
Rep. Raja Krishnamoorthi, an Illinois Democrat who serves as chair of the Oversight Subcommittee on Economic and Consumer Policy, sent nine letters to government agencies and crypto exchanges Tuesday, a two-pronged approach demanding a greater degree of consumer protection from crypto fraud.
In all the letters, dated and sent Tuesday, Krishnamoorthi wrote that "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.
"For all these reasons, I am concerned about the growth of fraud and consumer abuse linked to cryptocurrencies," Krishnamoorthi said.
In the four letters sent to federal financial authorities — the Treasury Department, Securities and Exchange Commission, Commodity Futures Trading Commission and Federal Trade Commission — Krishnamoorthi said that the U.S. government "has been slow to curb cryptocurrency scams and fraud," adding that "existing federal regulations do not comprehensively or clearly cover cryptocurrencies under all circumstances."
And, in five separate letters distributed to top crypto exchanges, including Binance.US, Coinbase, FTX, Kraken and KuCoin, the subcommittee chair acknowledged that the "private sector has taken some steps to protect consumers and investors and curb cryptocurrency fraud" but nonetheless argued that "significant risk remains." "Consumers are often unaware of the current patchwork of resources available to inform their investing decisions, and insurance companies are wary of providing insurance to individual consumers given the lack of regulation of digital assets," Krishnamoorthi wrote.
With a Sept. 12 deadline, Krishnamoorthi asked both the government regulators and private companies to answer a series of questions related to their consumer protection efforts. From the government, for instance, the subcommittee chair requested that agencies provide the congressional body "all policies, guidance, or other official documents regarding [the government's] efforts to combat crypto-related scams and fraud and inform consumers about the risks related to investments in cryptocurrencies" dating back to 2009.
From the digital asset exchanges, Krishnamoorthi similarly requested "all documents" related to the firms' "efforts to combat crypto-related scams and fraud," as well as an explanation of the "tools" the crypto companies "currently have in place to mitigate the risks of fraud or other criminal activity."
Krishnamoorthi also suggested in his letter to government agencies that Congress "may need to pass legislation" to better regulate the crypto sector, but did not cite or back any specific legislative language.
There are a number of bills circulating in and around Capitol Hill that could improve oversight over and establish basic legal guardrails for the crypto sector. A much-anticipated bill from the House Financial Services Committee to regulate stablecoins, for instance, was nearly introduced earlier this summer but
