White House Unveils Plan to Tackle Cryptocurrency Risks, Calls for More Enforcement
The White House has released a roadmap calling on authorities to increase enforcement and step up efforts to regulate the cryptocurrency sector.
In an official blog on Friday, the Biden administration detailed its plans to address potential risks posed by cryptocurrencies in a roadmap that calls for authorities to “step up as necessary” and for Congress to “step up its efforts” to regulate the sector.
The post begins by citing some notable failures in the cryptocurrency industry last year, including the implosion of Terra UST’s algorithmic stablecoin that prompted a wave of defaults. He also noted the collapse of FTX, once the third largest cryptocurrency exchange in the world, causing billions in losses to users.
“Thankfully, the turmoil in the cryptocurrency markets has had little negative impact on the broader financial system to date,” the post reads, adding that the Biden administration is focused on mitigating cryptocurrency risks and making sure that do not compromise financial stability.
“Under the leadership of President Biden, we have spent the past year identifying the risks of cryptocurrencies and taking action to mitigate them using the authority available to the executive branch.”
The post added that “experts across the administration have defined the first-ever framework for developing digital assets securely and responsibly while addressing the risks involved.”
It noted some of the biggest risk factors, including lack of applicable regulations, misleading claims, failure to disclose adequate information, and inadequate cybersecurity measures “allowing the DPRK to steal over $1 billion to finance its aggressive missile program.”
Additionally, the administration has called on agencies to use their executive power and “strengthen enforcement where appropriate and issue new guidance where needed.” In particular, the government has asked Congress to increase efforts to regulate the cryptocurrency market.
“Congress should expand the powers of regulators to prevent abuses of client assets, which hurt investors and distort prices, and to mitigate conflicts of interest.”
The administration noted that Congress should not allow traditional institutions such as pension funds to dabble in cryptocurrency markets as this would strengthen ties between cryptocurrencies and the broader financial system and increase systemic risks, calling it “a grave mistake.” pass laws that deepen ties.
Written by White House advisers Brian Deese, Arati Prabhakar, Cecilia Rouse and Jake Sullivan, the document concluded that the Biden administration supports responsible technology innovations that make financial services cheaper, faster, safer and more accessible taking into account the potential risks.
“To put the right safeguards in place, we will continue to advance the digital assets framework we have developed, working with Congress to achieve these goals,” the document said.