A whole new currency operation is growing and its liquidity is setting off alarm bells among the Federal Reserve Securities and Exchange Commission and other Federal banking regulators….
The new currency has scant rules and moves so fast that customers may not be protected by a system that regulators have few to any rules and oversight….
Congress and State Banking systems are way behind even knowing how some of companies in this business do things….
The money flowing into the new system grows each day…
Like the birth and operation of the internet….
It’s the ‘Wild West’…..
Which is alright except for those who get burned and lose money…..
BlockFi, a fast-growing financial start-up whose headquarters in Jersey City are across the Hudson River from Wall Street, aspires to be the JPMorgan Chase of cryptocurrency.
It offers credit cards, loans and interest-generating accounts. But rather than dealing primarily in dollars, BlockFi operates in the rapidly expanding world of digital currencies, one of a new generation of institutions effectively creating an alternative banking system on the frontiers of technology.
“We are just at the beginning of this story,” said Flori Marquez, 30, a founder of BlockFi, which was created in 2017 and claims to have more than $10 billion in assets, 850 employees and more than 450,000 retail clients who can obtain loans in minutes, without credit checks.
But to state and federal regulators and some members of Congress, the entry of crypto into banking is cause for alarm. The technology is disrupting the world of financial services so quickly and unpredictably that regulators are far behind, potentially leaving consumers and financial markets vulnerable.
In recent months, top officials from the Federal Reserve and other banking regulators have urgently begun what they are calling a “crypto sprint” to try to catch up with the rapid changes and figure out how to curb the potential dangers from an emerging industry whose short history has been marked as much by high-stakes speculation as by technological advances.
In interviews and public statements, federal officials and state authorities are warning that the crypto financial services industry is in some cases vulnerable to hackers and fraud and reliant on risky innovations. Last month, the crypto platform PolyNetworkbriefly lost $600 million of its customers’ assets to hackers, much of which was returned only after the site’s founders begged the thieves to relent.
“We need additional authorities to prevent transactions, products and platforms from falling between regulatory cracks,” Gary Gensler, the chairman of the Securities and Exchange Commission, wrote in August in a letter to Senator Elizabeth Warren, Democrat of Massachusetts, about the dangers of cryptocurrency products. “We also need more resources to protect investors in this growing and volatile sector.”….