Regulators overwhelmingly penalize fiat, not crypto

Regulators overwhelmingly penalize fiat, not crypto


While financial regulators have been at the back of cryptocurrency businesses, either banning them or imposing fines, the penalty is still a fraction of what is levying against traditional fiat currencies.


The violations tracker firm Good Jobs First has analyzed data from the 50 most prominent fines regulators levied against significant investment institutions and brokers over the period of the last 20 years. The data showed Bank of America accruing approximately $82 billion covering 251 different fines that include securities violations and other legal penalties. 


Along with the same, JPMorgan Chase and Citigroup were the most fined banking institutions since 2000, their penalties amounting to about $35.9 billion and $25.5 billion, respectively.


Reports from US regulators show enforcement actions and securities violations against banks and crypto exchanges. Still, those fines against cryptocurrency spaces cost less than 1 per cent of that in traditional finance. 


Between 2009 and 2021, total fine amounts for cryptocurrency-related business and exchanges have totalled to the sum of $2.5 billion in the United States, while Good Jobs First data shows there were $332.9 billion penalties in investment firms, banks and brokers in the last 20 years.


One of the largest actions, as data shows, came from the Securities and Exchange Commission against the 2018 Telegram initial coin offering. While $1.2 billion went in disgorgement, $18.5 million went in civil penalties in 2020 after Telegram was charged for violating securities laws. 


Bank of America received the largest fine, a sum of $16.6 billion slapped on the institution from the Department of Justice for selling “toxic” mortgages during the 2008 financial crisis.


In cases involving the SEC, Financial Crimes Enforcement Network, and Commodity Futures Trading Commission against crypto firms, fraudulent accounts and unregistered offerings, total fines amounted to more than 90 per cent. Good Jobs First state that “toxic securities abuses,” accounted for roughly 29 per cent, i.e., $97 billion of the $332.9 billion in total penalties. With $68 billion, investor protection violations came second.


As BitMEX was made to pay up $100 million to resolve a case from the CFTC and FinCEN and crypto businesses are continuing to become the target of enforcement actions by US regulators, policymakers across the globe are becoming increasingly aware of the economic impacts of not having a regulated system of legal guidelines for innovative industries.


With regard to the same, several US senators have initiated proposals to amend legislation to implement tighter rules on the handling of cryptocurrencies and reporting requirements for brokers.

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