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U.S., Foreign Regulators Working Well Together To Combat Cryptocurrency Fraud, Says CFTC Chair

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The Commodity Futures Trading Commission, the Securities and Exchange Commission, U.S. bank regulators and foreign financial regulators are working well together to combat cryptocurrency fraud, CFTC Chair Christopher Giancarlo said today.

At a House committee hearing on the CFTC’s budget for next year, he said he has had talks about cryptocurrency recently with the International Organization of Securities Commissions (IOSCO) and with European regulators.

Giancarlo said he doesn't know when a Treasury Department working group on cryptocurrency enforcement that includes the CFTC, the SEC and bank regulators would come up with a coordinated plan to address the who-should-regulate-what and how-issues.

The CFTC is currently able to regulate cryptocurrency futures, but not the actual buying and selling of bitcoin and other virtual currencies.

The SEC’s jurisdiction comes into play when cryptocurrency products are deemed to be securities.

Both Giancarlo and SEC Chair Jay Clayton have raised the possibility that the financial overseers will ask Congress for more power and clarification on cryptocurrency regulation.

While stressing the CFTC has been aggressive in trying to root out virtual currency fraud, Giancarlo said press coverage of cryptocurrencies far outweighs their impact on the financial markets.

Connecticut Democratic Rep. Rosa DeLauro accused Giancarlo of weakening the policing of larger markets by devoting too much effort on cryptocurrency enforcement.

She noted only 5% of Americans own Bitcoin. “You have a limited budget,” DeLauro chastised the CFTC Chair.

Cutting back staffers working on cryptocurrency futures enforcement would leave people vulnerable, particularly young people, Giancarlo responded.

Speaking about young people, the chairman of the House unit that oversees the CFTC’s budget, Alabama Republican Robert Aderholt, said his interest in the topic comes in part from his 14-year-old son’s discussions about virtual currency. Aderholt said he is worried about reports of people mortgaging their homes to buy cryptocurrency.

At the budget hearing, he said the CFTC will have to devote resources to technology and staff to work hand-in-hand to attack cryptocurrency fraud.

“Simply hiring more people won’t stop the advanced degree to which…cryptocurrencies will go to rip-off customers in the marketplace,” the Congressman said.