CRYPTOCURRENCY — The US Treasury has been closely watching the cryptocurrency market since Financial Markets around the world started to struggle in the contractionary market condition. The industry provided an avenue for excess capital outflow from the falling securities prices. Hence, a rise in speculative investing and trading poured in, and billions of dollars have been reallocated to crypto projects — inflating the total market capitalization of the industry, which, despite the bearish economic condition, is currently valued at $1 Trillion.

Just this year, the US Treasury has been at the forefront of the US Government in numerous industry investigations on crypto controversies such as large-scale scams, hacking incidents, and the illegal use of the network to bypass global banking systems, restrictions, and even economic sanctions.

US Treasury Issues Serious Warning on the Industry

The Secretary of US Treasury, Janet Yellen, in its latest statement warning the public, has said that cryptocurrency is a “very dangerous … and a very risky investment.” An asset class that the general public must “not rely on investing in cryptocurrencies as part of their retirement strategy.”

She called on the US Congress to take a more active stance and warn the general public about the risk associated with investing in cryptocurrency. In addition, she added, “Congress needs to explain which assets can be added to retirement options, such as 401(k) plans.” The statement was a subsequent response as Fidelity Investments, a prominent Asset Manager in the US, issued a statement to its investors that they will add Bitcoin (BTC) to their 401(k) retirement portfolios soon.

The department is reportedly concerned with numerous market participants, primarily individuals relying on cryptocurrency for retirement and pouring their life savings towards speculative cryptocurrency projects. A recent example of this is now the infamous Anchor Protocol that lost virtually 100% of its value, leaving its investors, especially those who held on with nothing.

Cryptocurrency’s Anonimoty Must be Addressed

The Treasury Deputy Secretary, Wally Adeyemo, addressed the financial industry during the recently concluded 2022 Consensus conference on the 10th of June. He noted that financial institutions must be “aware of individuals they transact with to eliminate promoting criminal activities through cryptocurrencies.”

He added, “We are working to address the unique risks associated with unhosted wallets. Because unhosted wallets are effectively managed on a blockchain, it can be challenging to determine who owns and controls them — creating opportunities to abuse this heightened anonymity.”

The US Treasury maintains its conservative stance toward cryptocurrencies as the department continues to warn against money laundering and terrorist funding which it believes to be rampant in the cryptocurrency space. In addition, the department believes that despite one of the primary use cases of cryptocurrencies being for transactions, it strongly views cryptocurrencies as inefficient for transactions and currently lacks a practical use case.

Crypto Crash Finally Manifesting?

On Tuesday, the 14th of June, Bitcoin hit a new low of $22,000, losing roughly 68% from its all-time high of around 67,500 in November of last year. Furthermore, in a span of one week alone, it lost more than 30% of its value. The consistent call for higher government regulation and oversight, as well as the increasing interest rates, are proving to be catastrophic to the industry as we might be seeing the cryptocurrency crash manifesting before our eyes.