After Bitcoin’s genesis block initiated a dynamic upheaval of financial services and other industries with the introduction of blockchain technology 14 years ago, U.S. authorities are now investing more time in understanding cryptocurrencies and their potential economic consequences.
On Dec. 14, the Financial Accounting Standards Board (FASB) conducted its first agenda consultation with investors in five years to discuss new accounting and disclosure requirements for entities holding crypto assets in their financial statements. These anticipated regulations are expected to be released within the initial half of 2023.
SEC will aggressively monitor the crypto market
A few days ago, the SEC issued a letter to companies in the crypto markets alerting them of recent developments and urging them to consider adding disclosures about these changes in their filings. However, this could include business descriptions, risk factors, and management’s discussion and analysis within their documents.
According to Mark Kornfeld, a securities and financial fraud shareholder at the law firm Buchanan Ingersol and Rooney, many players in both the crypto and finance industries will be impacted significantly by these changes. “The modifications are predicted to have macrocosmic and microcosmic ramifications on monetary markets not only generally but also, particularly, within the cryptocurrency sphere,” declared Kornfeld. The attorney continued:
First, the Commission, much like it did after the Madoff Ponzi scheme was disclosed to the world at large, will be aggressively monitoring and doing full-blown regulatory examinations of in time thousands (if not more) conducting business in and around this space. All in the market should reasonably anticipate and fully expect a sizable uptick in regulatory enforcement proceedings by the Commission, and, continued legal challenges to, the Commission’s jurisdictional authority.
IRS joins forces with crypto companies to fight cybercrime
The Internal Revenue Service (IRS) is ramping up its scrutiny of cryptocurrency, with its Criminal Investigation division now hiring hundreds of new agents to pursue digital assets and cybercrime. Moreover, the IRS aims to join forces with crypto companies in a “symbiotic relationship” to combat financial crime. Its team includes data scientists dedicated solely to this purpose, allocating resources to deciphering the web of criminal activity embedded within the virtual asset world.
U.S. legislators face mounting pressure to create a regulatory code for cryptocurrencies preemptively, thanks to the FTX crypto exchange crash of last November—which will undoubtedly lead to more stringent oversight in the world of cryptocurrency next year and beyond.
While some believe that the result of these changes will be more beneficial in the future, Kornfeld stated, “We’re expecting to see a much stricter and visible atmosphere with added market stability, better investor protection as well as consumer security since this industry had been seemingly opaque before.”
