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Game of Thrones: Who should be the regulator of the crypto market?

Since the introduction of Bitcoin in 2009, the first decentralized cryptocurrency — there is no unified cryptocurrency regulator for this virtual asset in the US and other countries. In order to reap the benefits of digital assets, U.S. regulators must impose sensible regulation.

The truth is, the regulation is still a mess and there is no solid decision on which regulatory board it will fall. Is the SEC or FED? Fortunately, regulation of digital assets does not require legislation.

As of now, the regulations are all based generally on the type of business a certain crypto is involved in. A noteworthy sample is Ripple Labs’ unending litigation with SEC, which alleges its native token XRP is unregistered security.

In this article, we will briefly explain the role of these financial regulators. Respectively, we will cite the situations when these financial regulators play a role in cryptocurrencies. So, without further ado, let’s start with the most popular regulator involved in crypto.

Securities Exchange Commission (SEC)

A primary function of the SEC is to oversee the securities market, including securities exchanges, brokerage firms, dealers, investment advisors, investment funds, and investment advisories. The SEC encourages market transparency and fair dealing through securities rules and regulations.

For starters, SEC seems to believe that many of the existing tokens do meet the criteria of being an investment contract, note, or security. From the SEC’s point of view, securities law is very clear that if the public is investing and raising money in an asset, that fits within the securities law.

(Check out our previous article where we discuss further why is SEC concerned in crypto.)

Consumer Financial Protection Bureau (CFPB)

Meanwhile, we have the CFPB. The US government agency that ensures banks, lenders, and other financial companies treat you fairly.

Number of complaints submitted to CFPB about virtual currencies | Source: CFPB

Many companies from credit card companies to banks, are offering their customers the ability to buy, sell, and make payments with virtual currencies. This is when CFPB gets involved in this matter. Not to mention, it received a total of 1,433 complaints this year alone, up from its previous year’s 979 complaints.

Commodity Futures Trading Commission (CFTC)

We also have the CFTC, an independent U.S. government agency that regulates the U.S. derivatives markets, including futures, options, and swaps.

Bitcoin is a convertible virtual currency, and virtual currencies are considered commodities under the Commodity Exchange Act (CEA). Thus, whenever a virtual currency is used in a derivatives contract, the CFTC is involved. Also, they can be involved if there is fraud or manipulation involving a virtual currency traded in interstate commerce.

Office of the Comptroller of the Currency (OCC)

Now here goes OCC, an independent bureau of the U.S. Department of the Treasury. This agency is responsible for regulating and supervising all national banks, federal savings associations, and federal branches and agencies of foreign banks.

In July, the OCC released an order clarifying that federally-chartered banks can custody cryptocurrencies, which was seen as a positive step in mainstreaming the industry. The OCC gave national banks permission to offer crypto custody services, conduct payments using stablecoins and work with crypto custodians. It actually made history by approving the first crypto company (Anchorage) to become a national bank in the U.S.

In other words, if cryptocurrencies can only be an investment in the future, then it is understandable that SEC will come to regulate them, but if a cryptocurrency definition is involved, then OCC is bound to be included.

When certain cryptocurrencies will be considered as “securities” for purposes of the federal securities laws, these crypto can be subject to the OCC’s regulations on recordkeeping and confirmation requirements for securities transactions and the SEC’s federal securities laws.

Federal Deposit Insurance Corporation (FDIC)

The mission of FDIC is to maintain stability and public confidence in the nation’s financial system. It can be recalled, FDIC expressed an interest in custodianship of digital assets by insured depository institutions.

In May, the FDIC requested information regarding insured depository institutions’ current and potential digital asset activities, including custodial activities. The request may be an effort to bring more clarity to financial institutions in terms of the regulatory treatment of digital assets.

As a whole, the actions taken by the OCC, SEC, and FDIC appear to be intended to establish equality of access among different types of regulated custodians.

Federal Reserve System a.k.a the FED

The Federal Reserve System, often referred to as the Federal Reserve or simply “the Fed,” is the central bank of the United States. It was created by the Congress to provide the nation with a safer, more flexible, and more stable monetary and financial system.

To be honest, the big concern in the crypto space is if the FEDs get involved, it might affect the prices badly. Why? If cryptocurrency becomes the most dominant fiscal or monetary instrument in the future, then they are bound to get involved. This goes back to their two main purposes — to control inflation and protect employment.

Internal Revenue Service (IRS)

IRS is the revenue service of the United States federal government, which is responsible for collecting taxes and administering the Internal Revenue Code, the main body of the federal statutory tax law.

When it comes to taxing matter in crypto, we have the IRS. Unlike other government agency, the IRS has been less vocal on cryptocurrency. However, in May 2021, the Treasury said the tax agency would require disclosure of cryptocurrency transfers worth more than $10,000. On the contrary, a bill has been proposed that any gains from cryptocurrency equal or less than $200 will not be taxable.

Financial Crimes Enforcement Network (FinCen)

Finally, we have FinCEN, a government agency whose mission is to prevent and punish criminals and criminal networks that participate in money laundering and other financial crimes.

All matters that concern money laundering, FinCen is there. Hence, if a crypto trader or investor is proven to have disguised an illegally obtained funds as legitimate income, the FinCen can definitely be involved.


We hope this information has helped you to better understand the nature of each financial regulatory office. Despite everything appearing a bit chaotic right now, one thing is for certain — crypto must be regulated properly in order to thrive. If these financial regulators work together, virtual currencies will become a safer space for all.

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ALPEX is a globally renowned digital asset spot and derivatives trading platform, aiming to provide the most innovative, professional, smooth, transparent and trustworthy digital asset trading services for traders worldwide.

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ALPEX is a cutting-edge digital asset and derivatives trading platform, created to provide the world’s best and most secure online trading experience.

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