- The SEC, FASB, and IRS are attempting to increase industry monitoring and tighten crypto regulations
- Within the first half of 2023, the proposed regulations are anticipated to be released
The cryptocurrency industry has experienced tremendous growth in recent years, with more and more individuals and businesses adopting digital assets as a means of exchange and investment. However, this growth has also attracted the attention of regulators, who have expressed concerns about the potential for fraud and money laundering in the largely unregulated space. As such, it appears that US authorities are planning to increase their scrutiny of the crypto industry in 2023.
One of the primary reasons for the increased regulatory focus on the crypto industry is the potential for criminal activity. The decentralized nature of many cryptocurrencies makes them attractive to those looking to evade law enforcement or engage in illegal activities, such as drug trafficking and terrorism financing. In addition, the lack of centralized oversight in the crypto space has also made it easier for bad actors to commit fraud or steal funds from investors.
The United States government is finally showing more interest in the future and economic impact of cryptocurrencies, 14 years after Bitcoin’s genesis block sparked a major revolution in financial services and other industries thanks to the advent of blockchain technology.
Following the first agenda consultation with investors in five years, the Financial Accounting Standards Board reviewed new accounting and disclosure criteria for firms holding crypto assets in financial statements on Dec. 14. Within the first half of 2023, the proposed rules are anticipated to be released.
A few days prior, the Securities and Exchange Commission sent a sample letter to companies asking them to consider including information about recent developments in the cryptocurrency markets in their filings. This includes their business descriptions, risk factors, and management’s discussion and analysis.
According to reports, the Internal Revenue Service (IRS) is also focusing more on cryptocurrency and has hired hundreds of new agents to work on digital assets and cybercrime. The IRS is looking to collaborate with cryptocurrency companies in addition to its own data scientists in an effort to forge a “symbiotic connection” to combat financial fraud.
After the abrupt collapse of the cryptocurrency exchange FTX in November of last year, which paved the way for forthcoming governmental examination of the crypto market in 2023, lawmakers in the United States are also under pressure to establish a new legal framework for cryptocurrencies.
However, other individuals think the long-term results will be favourable. The end result, according to Kornfeld, “should prove to be a more regulated and transparent climate, increased market stability, and greatly improved investor and consumer protection in a space that has operated up until recently in an environment that is fairly characterized as relatively secretive and opaque.”
It is evident that US authorities intend to scrutinize the cryptocurrency market more closely in 2023 in order to address any potential problems related to digital assets. However, it’s crucial that regulators strike a balance and not impose unduly burdensome restrictions that could hinder innovation and push businesses and investors away from the US market. This enhanced regulation may be required to safeguard consumers and prevent criminal conduct.