The feds have a clear message for cryptocurrency users: A crackdown is coming.
Federal Reserve vice chair of supervision Randal Quarles told the Senate Banking Committee on Tuesday that the agency is in a “sprint” alongside other US financial regulators to tighten supervision of cryptocurrencies like bitcoin and ethereum, according to Reuters.
“We along with the OCC and the FDIC are engaged right now in what we are calling a sprint in seeking to pull together views on exactly that,” Quarles said.
While the vice chair did not provide details on the Fed’s plan, he said the matter was “high priority.”
The comments come just days after Fed Chairman Jerome Powell told lawmakers that cryptocurrencies, which have fluctuated wildly in value in recent months, pose risks to the stability of the global financial system.
Bitcoin has traded below $32,000 this month after reaching a high of more than $60,000 in April. It was trading for around $39,000 Wednesday morning. Other cryptocurrencies like DogeCoin and SafeMoon have experienced even greater price swings.
In addition to crypto’s volatility posing risk to individual investors, cryptocurrency critics say the assets’ decentralized and hard-to-trace nature can help groups like terrorists and drug traffickers more easily transfer money.
In response to such concerns, the Treasury said last week it will start requiring any cryptocurrency transfers worth $10,000 or more to be reported to the Internal Revenue Service.
“I think many are used, at least in a transactions sense, mainly for illicit financing,” Treasury Secretary Janet Yellen said in January.
And in May, Securities and Exchange Commission Chairman Gary Gensler said the crypto market “could benefit from greater investor protection,” calling on Congress to consider a “regulatory framework.”
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