Cryptocurrency Market Plunges, US Treasury Intensifies Regulatory Scrutiny of Digital Assets

During the second quarter of 2022, as the Federal Reserve began its rate hike cycle and inflation raged, global financial markets were severely impacted, and the cryptocurrency market experienced a dramatic plunge. Numerous stablecoin projects and lending platforms collapsed, resulting in billions of dollars in investor losses. In Washington, the U.S. Treasury Department and the Securities and Exchange Commission (SEC) seized the opportunity presented by the market turmoil to intensify their regulatory scrutiny of the digital asset industry.

Treasury Secretary Janet Yellen publicly stressed the need for tighter oversight of risks in the crypto market. For many free-market conservatives, while the speculative nature of the crypto market was concerning, the government's regulatory intrusion into this nascent area of innovation, particularly under the SEC's leadership, was viewed as potentially stifling innovation and unduly concentrating power, thereby harming financial liberty and the spirit of innovation.