In the midst of ongoing scandals within the cryptocurrency industry, Washington policymakers are showing little interest in enacting legislation to regulate the sector. The latest development is Binance's multibillion-dollar settlement with U.S. authorities and the subsequent resignation of its CEO. This comes on the heels of FTX founder Sam Bankman-Fried's conviction for embezzling billions from customers and the collapse of several smaller crypto companies, resulting in significant financial losses for investors.

Last year, when cryptocurrencies suffered a major collapse and numerous companies failed, Congress considered various approaches to regulate the industry. However, most of these efforts have not gained traction, particularly amid the chaotic year marked by geopolitical tensions, inflation concerns, and the upcoming 2024 election. The appetite for new regulations appears to be at an all-time low.

Treasury Secretary Janet Yellen, during a news conference announcing the $4 billion settlement with Binance, emphasized that existing regulations already apply to cryptocurrencies. She stated, "I think today's actions show that we are serious about enforcing strong regulations that are already in place to make sure that illegal transactions are not fostered by cryptocurrency entities." Yellen further expressed the need to update and adjust regulatory tools to address emerging threats.

In October, a group of over 100 mostly Democratic lawmakers urged the White House to take responsibility for preventing the use of cryptocurrencies in financing terrorism. They called on the Biden Administration to take action.

Binance CEO Changpeng Zhao pleaded guilty to a felony related to his failure to prevent money laundering on the platform. As a result, Zhao stepped down, and Binance admitted to violating the Bank Secrecy Act and sanctions programs by failing to implement reporting programs for suspicious transactions. The settlement agreement requires Binance to undergo five years of monitoring and adhere to significant compliance undertakings, including exiting the United States completely.

Attorney General Merrick Garland described the settlement as one of the largest corporate penalties in U.S. history. The three largest entities in the crypto industry in recent years, namely Binance, Coinbase, and FTX, are now facing severe legal issues, investigations, or have collapsed entirely.

In the absence of congressional action, federal regulators such as the Securities and Exchange Commission (SEC) have taken their own enforcement measures against the crypto industry. Lawsuits have been filed by the SEC against Coinbase, Binance, and Kraken, three major cryptocurrency exchanges. Just this week, the SEC charged Kraken with operating its crypto trading platform as an unregistered securities exchange. Furthermore, PayPal disclosed that it received a subpoena from the SEC regarding its PayPal USD stablecoin and is cooperating with authorities.

Some members of Congress have opposed the SEC's actions, arguing that the commission needs congressional approval to pursue bad actors or that cryptocurrencies should be regulated more like commodities, falling under the jurisdiction of the Commodity Futures Trading Commission (CFTC). Senators Debbie Stabenow, a Democrat from Michigan, and John Boozman, a Republican from Arkansas, proposed transferring regulatory authority over cryptocurrencies to the CFTC.

Congress has made proposals regarding crypto regulation, but it has yet to take definitive action. The reluctance to intervene can be attributed, in part, to lawmakers' struggle to reach a consensus on how to define and regulate cryptocurrencies. Additionally, influential members of Congress, such as Senator Sherrod Brown, the Ohio Democrat who chairs the Senate Banking Committee, are skeptical of cryptocurrencies and hesitant to pass legislation endorsing them. Brown has held multiple committee hearings on crypto-related issues but has not advanced any legislation.

In the House, a bill seeking to introduce regulatory measures for stablecoins, which are cryptocurrencies backed by tangible assets like the U.S. dollar, passed the House Financial Services Committee earlier this year. However, the bill has received minimal attention from the White House and the Senate.

Consumer advocates remain skeptical about the necessity of new regulations or the overall usefulness of cryptocurrencies. Dennis Kelleher, president of Better Markets, a nonprofit organization dedicated to building a more secure financial system, expressed concerns about the industry's lawlessness and criminal activities. He stressed the need for prosecutors, regulators, and elected officials to hold the crypto industry accountable and ensure it adheres to the same standards as other law-abiding financial entities.