On Nov 6., two US congressmen introduced bills meant to protect crypto investors from market manipulation. The laws also seek to position the United States as a leading light in the cryptocurrency industry. The two are Republican representative Ted Budd of North Carolina and Democrat representative Darren Soto of Florida.
The first bill is the Virtual Currency Consumer Protection Act. It directs the CFTC to explain how crypto price manipulation occurs and also recommends the regulatory changes necessary to prevent it.
The other bill is the Virtual Currency Market and Regulatory Competitiveness Act. The law prescribes that the CFTC conducts a comparative study of cryptocurrency regulations in other nations.
Then after it should recommend ways in which the United States can be more competitive by providing regulatory clarity. Also by coming up with alternatives to burdensome laws that may hold back innovation.
Cryptocurrencies And The Blockchain Have The Potential To Drive Economic Growth
The two congressmen hail the profound potential of cryptocurrencies and the blockchain technology. In a joint statement, they said:
“Virtual currencies and the underlying blockchain technology has a profound potential to be a driver of economic growth. That’s why we must ensure that the United States is at the forefront.”
They added that the laws they proposed would protect both consumers and investors without hindering an ‘environment for innovation.’
According to a report released by New York Attorney General’s Office in September of this year, crypto exchanges are easily manipulated because they lack safeguards to prevent abusive trading, lack sufficient consumer protection and in many cases, there are conflicts of self-interest.
The report noted:
“Platforms lack robust real-time and historical market surveillance capabilities — like those found in traditional trading venues — to identify and stop suspicious trading patterns.”
In June of this year, Professor John MN. Griffin of the University of Texas published a damning report claiming that 50 percent of the increase witnessed in the Bitcoin price in 2017 was artificially manipulated using Tether.
Griffin is a financial fraud specialist. In the report, he noted that Tether was used on Bitfinex to buy Bitcoin after its price had slipped.
“It was creating price support for Bitcoin, and over the period that we examined, had huge price effects. Our research would indicate that there are sophisticated people harnessing investor interest for their benefit.”