Why is investor protection and enforcement still important?

Until recently, there has been a “glut of green candles” in the cryptocurrency markets since Trump won the election. Bitcoin has temporarily broken the critical $100,00 level, marking a nearly 500% recovery from the cryptocurrency’s winter 2022 lows Optimism about cryptocurrencies has reached Congress, as talks about a US national Bitcoin reserve gain significant momentum .

If stock market bulls are marathons, then cryptocurrency bulls are super-sprints. But buyer beware: When cryptocurrency prices soar and FOMO takes hold, scammers seize the moment, turning the hype into a gold mine for illicit activity.

With no clear regulatory framework yet, the risks are exacerbated. With former President Trump returning to office with a more pro-crypto Congress, regulatory change appears imminent. But what risks do investors face if implementation measures are not adequately funded?

The 2024 election results could mark a pivotal chapter in the history of cryptocurrencies. Can the new Trump administration rise to the challenge to not only unleash more innovations in the cryptocurrency space, but also better protect its users and investors?

Why should enforcement and protection remain a priority?

The rise of cryptocurrencies is often accompanied by an increase in scams and scams. In 2023 alone, a period of rising prices, the FBI’s Cryptocurrency Fraud Report showed that there were $5.6 billion in losses reported linked to cryptocurrency scams and fraud. A staggering 70% ($3.9 billion) of these losses were due to investment fraud.

While phishing scams are rampant in the digital world, Bitcoin ATM scam losses rose tenfold from 2020 to midway through 2024. Describes the issue in a concrete way. $65 million was stolen in just the first six months of 2024 via Bitcoin ATMs, with an average loss of about $10,000 according to the Federal Trade Commission. Collectively, these numbers show the financial damage and reveal loopholes that must be addressed to protect consumers and deter bad actors — especially if cryptocurrencies are to continue to gain traction and popularity.

The UK has shown how government policy can adapt to directly address the rise in cryptocurrency-related crime. In 2024, legislative updates were made to allow more effective enforcement of the law Investigate, confiscate and recover illicit crypto assets. Key measures include allowing the seizure of assets without prior arrests, confiscating items related to the investigation such as passwords, transferring assets to wallets controlled by law enforcement, destroying certain crypto assets such as privacy coins when necessary, and enabling victims to recover their funds.

The challenge is to find a balance between the measures implemented in the UK, while ensuring the privacy and sovereignty of cryptocurrency users.

For the United States to maintain its reputation as a world leader in financial regulation, it must create frameworks that foster innovation while protecting market participants from bad actors, and refocus efforts on investigating criminal activity.

At the heart of the problem lies regulatory ambiguity, which has plagued the cryptocurrency industry for years. In 2024, despite Bitcoin and Ethereum ETFs gaining approval, enforcement actions against major cryptocurrency institutions have intensified, something critics point to as a contradictory approach to oversight. This uncertainty stifles innovation and leaves companies struggling to navigate an inconsistent regulatory landscape.

For the incoming Trump administration, there is a clear starting point for resolving high-level compliance issues: creating a clear division of responsibilities between agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to eliminate regulatory overlap. Or vague rules, but this only partially solves the larger problem.

Investor protection protects the growth potential of cryptocurrencies

Compliance frameworks are only as strong as those they investigate and implement. Effective compliance requires investment – ​​not only from individual companies but also from enforcement agencies. If there is no one to enforce the rules, bad actors have nothing to fear. Historically, regulatory bodies have lacked the specialized resources needed to oversee the rapidly evolving digital asset landscape, especially at the country level. Now the Trump administration has an opportunity to prioritize investment in specialized law enforcement capabilities, equipping agencies with the tools, talent, and technology needed to stay ahead of sophisticated bad actors.

For example, this could include creating deeper channels for law enforcement cooperation and facilitating public-private partnerships to monitor and prevent illegal activities in the digital asset space. It could also significantly reduce the stringent enforcement approach currently applied to the cryptocurrency industry.

By allocating funds to train staff and develop resources specifically designed for digital assets, agencies can better track, investigate and prosecute illicit activity. Additionally, public and private investments in blockchain analysis tools could enable more effective tracking of transactions, deter bad actors and aid in asset recovery in cases of fraud.

This enhanced enforcement strategy will not only protect consumers, but will also enhance the legitimacy and reputation of the US digital asset market on the global stage.

What will cryptocurrencies look like under a pro-crypto president and Congress? For me, the future is exceptionally bright. However, the way forward will require active dialogue, strategic investments, and a commitment to collaboration between industry leaders and regulators. This moment has the potential to redefine the digital asset landscape in the United States, and set high standards for the world.