White House unveils plan to tackle cryptocurrency risks, calls for increased enforcement

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Source: Adobe Stock / Joe Gough

The White House has released a roadmap asking authorities to strengthen enforcement and step up efforts to regulate the crypto industry.

In an official blog on Friday, the Biden administration detailed its plans to address the potential risks of cryptocurrencies in a roadmap that calls on authorities to “step up enforcement where appropriate” and Congress “to step up its efforts” to regulate the industry.

The post begins by citing some major failings in the crypto industry over the past year, including the implosion of Terra’s algorithmic stablecoin UST that caused a wave of insolvencies. He also noted the collapse of FTX, once the world’s third-largest cryptocurrency exchange, which caused users billions in losses.

“Fortunately, the turmoil in the cryptocurrency markets has had little negative impact on the broader financial system to date,” the message read, adding that the Biden administration is focused on mitigating the risks of cryptocurrencies and on the guarantee that they do not compromise financial stability.

“Under President Biden’s leadership, we have spent the past year identifying the risks of cryptocurrencies and taking action to mitigate them using the powers available to the executive branch.”

The post added that “administration experts have laid out the first-ever framework for developing digital assets in a safe and responsible manner while addressing the risks they pose.”

He noted some of the key risk factors, including lack of enforceable regulations, misleading statements, lack of adequate disclosure and poor cybersecurity measures “that have allowed the Democratic People’s Republic of Korea to steal more than $1 billion to fund its aggressive missile program. “

In addition, the administration called on the agencies to use their executive power and “step up enforcement where appropriate and issue new guidance where necessary.” Specifically, the government has asked Congress to step up its efforts to regulate the crypto market.

“Congress should expand the powers of regulators to prevent abuse of client assets — which harms investors and distorts prices — and to mitigate conflicts of interest.”

The administration noted that Congress should not allow traditional institutions such as pension funds to venture into cryptocurrency markets, as this would deepen the ties between cryptocurrencies and the broader financial system and would increase systemic risks, calling it a “serious mistake” to 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 technological innovations that make financial services cheaper, faster, more secure and more accessible. while taking into account the potential risks.

“To put the right safeguards in place, we will continue to advance the digital asset framework we have developed, while working with Congress to achieve these goals,” the document states.

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