The nation's two top financial regulators said Tuesday the Congress may need to grant them new powers if they are to protect consumers from fraud on cryptocurrency exchanges.
They were asked by federal lawmakers Tuesday whether they had enough authority to protect cryptocurrency investors from scams, market manipulation and abuse. Top officials from the Securities and Exchange Commission and the Commodity Futures Trading Commission said that the agencies were still consulting with other U.S. officials but that they may need more legislative authority.
“When you have an unregulated exchange, the ability to manipulate prices goes up significantly,” said SEC Chairman Jay Clayton. “Just a few coordinated sales can change the price.”
The SEC and the CFTC have broad power over stock markets and investments products. But that authority does not extend to currency markets, officials said Tuesday, meaning regulators cannot impose the same rules on cryptocurrency exchanges that apply to, say, the New York Stock Exchange.
For an example, the SEC requires stock exchanges to adhere to cyber security regulations. By contrast, said CFTC Chairman J. Christopher Giancarlo, regulators lack the authority demand the same of cryptocurrency exchanges, which have fallen victim to multiple devastating hacks and thefts in recent years.
“We may be back with our friends from Treasury and the Fed to ask for additional legislation,” Giancarlo said Tuesday in testimony before the Senate Banking Committee.
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