White House Announces Plan to Address Cryptocurrency Risks and Calls for Increasing Enforcement
The White House published a roadmap requesting authorities to intensify enforcement and increase efforts to regulate crypto.
The Biden Administration published an official blog Friday Detail It has laid out plans to address the potential risks posed by cryptocurrencies in a roadmap. This calls for authorities “to ramp up enforcement wherever appropriate” and Congress to “step up its efforts” regulate the sector.
This post begins by listing major failures in the crypto sector last year. It includes the implosion Terra’s algorithmic stablecoin, UST, which triggered a wave of bankruptcy. The post also highlighted the collapse of FTX which was once the third largest cryptocurrency exchange in the globe, resulting in billions in losses for users.
“Fortunately, turmoil in cryptocurrency markets has not had a negative impact on the wider financial system to this point,” the post stated. It also noted that the Biden Administration is focusing on mitigating risks and making sure they don’t undermine financial stability.
“Under President Biden’s direction we spent the last year identifying the potential risks associated with cryptocurrencies and taking action to mitigate them using the authority that the Executive Branch has.”
In the post, it was stated that experts from all levels of the administration had created the first-ever framework to develop digital assets in a safe and responsible manner while also addressing the potential risks.
It identified some of the most dangerous risk factors, such as misleading statements, lack of regulations, inadequate disclosures and poor cybersecurity. These all allowed the Democratic People’s Republic of Korea (DPRK) to steal more than a billion dollars to finance its aggressive missile program.
The administration also asked agencies to exercise their executive power to “ramp up enforcement wherever appropriate and issue new guidelines where necessary.” The government specifically asked Congress to intensify efforts to regulate crypto markets.
“Congress should increase the powers of regulators to prevent customers’ assets being misused, which can hurt investors and distort market prices. Also to reduce conflicts of interest.”
The administration stated that Congress should not permit mainstream institutions such as pension funds to enter cryptocurrency markets because this would increase systemic risk and deepen the ties between crypto and the wider financial system. It called it “a grave error” to pass laws that will deepen these ties.
The paper was authored by Arati Prabhakar and Cecilia Rouse (White House advisors), and concluded that the Biden Administration supports responsible technology innovations that make financial services more affordable, faster, safer and more accessible, while also taking into consideration potential risks.
The paper stated that “To ensure the best safeguards, we will continue driving forward the digital assets framework we’ve created, while working with Congress in order to achieve these goals.”