1 year ago
82 The FASB, SEC, and IRS are working hard to tighten crypto regulations and expand industry oversight. 14 years after Bitcoin’s Genesis block launched a major disruption in financial services and other sectors via the rise of blockchain technology, US authorities are now becoming highly interested in cryptos’ future and economic effect.
On December 14, the Financial Accounting Standards Board (FASB) discussed some new accounting and disclosure needs for entities holding crypto assets in financial statements, after an agenda consultation with investors – the first one in five years. The proposed rules are now expected to get issued in the first half of 2023.
Several days earlier, the Securities and Exchange Commission (SEC) delivered a sample letter about the recent developments in the crypto markets, asking firms to consider in their disclosures “the need to address crypto asset market developments in their filings generally, including in their business descriptions, risk factors, and management’s discussion and analysis.”
The changes are set to be felt by many players in the crypto and financial services sectors, according to the legal specialists. The securities and financial fraud shareholder at the law firm Buchanan Ingersol and Rooney, Mark Kornfeld, said:
“It should have a multi-pronged and ultimately profound macro and micro impact on financial markets generally and the crypto industry specifically.”
As highlighted by the attorney:
“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.”
Crypto is also allegedly becoming a focus of the Internal Revenue Service (IRS), with its Criminal Investigation division already hiring hundreds of new agents to help work on digital assets and cybercrime. Coupled with its data scientists, the IRS is hoping to cooperate with crypto companies, striving to develop a “symbiotic relationship” to combat financial crime.
Lawmakers in the United States are also under pressure to set a new regulatory infrastructure for cryptos after last November’s dramatic collapse of crypto exchange FTX, setting the stage for forthcoming scrutiny in the crypto market in 2023.
But, some people think the outcomes will be positive in the long term. Kornfeld noted:
“The net result should prove to be a more regulated and transparent climate, increased market stability, and much improved investor and consumer protection in a space that has until recently operated in an environment fairly characterized as relatively secretive and opaque.”
