Virtual Currencies: U.S. government looking ways to tighten regulations

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The Trump administration is looking for ways to crack down on predatory activities linked to virtual currencies. Financial regulators in Washington say they are working together to identify legal changes that are necessary to protect investors. CGTN'S Daniel Ryntjes reports.

The most potent symbol of how digital currencies have entered the mainstream, celebrities have been promoting them.

Pop star Katy Perry painted her nails with digital currencies.

Champion boxer Floyd Mayweather has even directly endorsed an Initial Coin Offering, with such celebrity endorsements prompting a warning from the U.S. Securities and Exchange Commission.

JAY CLAYTON, CHAIRMAN U.S. SECURITIES & EXCHANGE COMMISSION "Many ICOs are being conducted illegally. Their promoters and other participants are not following our securities laws. Some say this is because the law is not clear. I do not buy that for a moment."

Entrepreneurs are raising capital through 'initial coin offerings' which regulators say puts them squarely under standard laws related to stocks and bonds.

The U.S. Senate Banking Committee is also examining ways consumer access to trading in cryptocurrencies like Bitcoin and Ethereum.

JAY CLAYTON, CHAIRMAN U.S. SECURITIES & EXCHANGE COMMISSION "I think our mainstreet investors look at these virtual currency trading platforms and assume that they are regulated in the same way that a stock exchange is regulated. And as I say it's far from that. And I think we should address that issue."

MIKE CRAPO, CHAIRMAN SENATE BANKING COMMITTEE "Am I hearing you say that you don't think we should have additional legislative authorities?"

Clayton: "I think we may." Crapo: "So first you should get together and tell us what you can and cant' do, then advise us." Clayton: “I think that's a very good way to put it, Senator.”

U.S. financial authorities have recently formed a working group led by U.S. Treasury Secretary Steven Mnuchin to better regulate these emerging technologies and prevent illicit activities.

CHRISTOPHER GIANCARLO, CHAIRMAN U.S. COMMODITY FUTURES TRADING COMMISSION "We've launched several civil actions over the past several weeks cracking down on fraudsters and manipulators. And more will follow."

U.S. regulators are not opposed to digital currencies and have recently approved the trading of Bitcoin derivatives on the Chicago Mercantile Exchange.

DANIEL RYNTJES WASHINGTON "Despite all the concerns about illicit activity, U.S. regulators do envision multiple benefits from the use of these emerging technologies, once they work out how to properly absorb them into the financial system. Daniel Ryntjes.CGTN, Washington.