Regulator gears up for Bitcoin crackdown amid digital coin frenzy


Bitcoin and other cryptocurrencies are set to face new regulation and oversight under the Biden administration as interest in the digital coins rises.

Gary Gensler, the incoming chair of the US Securities and Exchange Commission (SEC), is expected to establish rules that allow more firms to handle Bitcoin but will come with strings attached that increase protection for customers.

Jeff Bandman, a former fintech official at the Commodities and Futures Trading Commission (CFTC) where Mr Gensler pioneered new financial protection laws under Barack Obama, said the SEC could push for similar regulations around cryptocurrencies.

“There will be things that promote regulatory certainty but that will require extra measures, additional customer protection measures and checks and balances,” Mr Bandman said.

“Right now there’s no federal regulator that directly supervises the spot crypto market for Bitcoin and others. If Chairman Gensler makes that a priority, there could be further steps.”

Mr Gensler, a former Goldman Sachs partner, pushed heavily for new laws and regulations to make financial derivative trading more transparent after the financial crisis. 

He has been a close follower of cryptocurrencies, teaching about and researching blockchain technology at MIT after leaving the CFTC.

Mr Gensler is believed to support cryptocurrencies but believe they need stricter supervision. Legal experts said this could mean more financial institutions being able to trade and hold Bitcoin, but being subject to stricter checks than currently exist. For example, they might have to follow security guidelines to ensure that the virtual assets cannot be stolen.





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