Regulating virtual currencies

U.S Treasury Secretary Mnuchin has expressed concerns about the use of cryptocurrencies for illicit activity and is urging the G-20 nations to join the U.S. in regulating this market, according to news reports.1

His remarks follow a recently issued joint statement by the Directors of Enforcement at the CFTC and SEC emphasizing their intent to combat fraud carried out “under the guise of offering digital instruments” by examining not merely the form of a transaction but the substance of the underlying activity to identify violations of U.S. securities and commodities laws. Over the past year, price swings in digital currencies have attracted both increased investor interest and heightened regulatory concern, bringing to light issues around trading and market abuse, fraud and consumer/investor protection, and the use of virtual currency in money laundering.

This Regulatory Alert highlights some of the recent developments in the regulatory oversight of digital currencies.