Biden Administration's Cryptocurrency Risk Planning: Prioritizing Cryptocurrency Development Initiatives to be Announced in a Few Months

The White House today, on the 28th, released the "Administration's Roadmap to Mitigate Cryptocurrencies Risks", stating that despite the stablecoin collapse in May 2022 causing waves of bankruptcies and harm to many cryptocurrency investors, fortunately, there has been minimal negative impact on the broader financial system. The White House believes that ensuring financial stability, protecting investors, and holding bad actors accountable are the government's responsibilities in addressing the risks associated with cryptocurrencies.

Cryptocurrency Risk Planning

Framework in Place

The White House has already established a framework to develop digital assets in a secure and responsible manner.

The White House acknowledges that blockchain does provide a faster, cheaper, and more secure method of payment. However, this method also comes with its risks, such as some cryptocurrencies disregarding applicable financial regulations and risk controls. Cryptocurrency platforms and promoters often mislead consumers, lack transparency, or engage in outright fraud without considering the best interests of users. Coupled with poor security in the industry, North Korea has stolen over a billion dollars to fund radical military programs.

Banks Required to Segregate Crypto Risks

The White House states that various regulatory bodies are currently enforcing laws at the right time and providing guidance. This month, banking institutions have issued joint guidelines to isolate digital asset risks from their systems.

Promoting Public Awareness

The White House mentions that government agencies are in the process of developing plans to help consumers understand the investment risks of cryptocurrencies.

Efforts to Combat Fraud

The White House notes that law enforcement agencies have doubled their efforts to combat fraud, such as misleading claims of FDIC insurance for digital assets.

Priority Areas for Digital Assets to be Disclosed

The White House mentions that it will disclose priority areas for research and development of digital assets in the coming months, which will help protect consumers in cryptocurrency technology.

Enhancing Regulatory Powers

The White House believes that Congress should push for enhanced regulatory authority to prevent the misuse of digital assets by users. There should also be increased transparency and disclosure requirements for crypto companies.

To assist law enforcement, Congress can strengthen penalties for violating financial regulations and prohibit intermediaries from aiding criminals. Congress should also fund law enforcement agencies to collaborate with international partners.

Legislation Should Not Greenlight Retirement Funds

The White House also states that Congress may make risk prevention work difficult. For example, legislation should not allow mainstream institutions like retirement funds to dive headfirst into the cryptocurrency market.

In the past year, traditional financial institutions have had only a small presence in the cryptocurrency market, effectively preventing cryptocurrencies from impacting the broader financial system. However, if Congress moves in the opposite direction and connects cryptocurrencies with the broader financial system, serious errors may occur.

The White House concludes by stating that the government fully supports responsible technological innovation to make financial services cheaper, faster, safer, and more accessible. However, corresponding safeguards must be in place to ensure that everyone is safe and beneficial.

The new digital economy is for everyone, not just a few.

We will continue to advance our developed digital asset framework while working with Congress to achieve these goals.