Home News White House Proposes Measures to Tackle Cryptocurrency Risks with Increased Enforcement

James Carter

29 Jan 2023

White House Proposes Measures to Tackle Cryptocurrency Risks with Increased Enforcement

The White House has released a road map in which it requests that authorities step up their attempts to regulate the cryptocurrency industry and increase the number of laws they enforce.

The roadmap that the Biden Administration released on Friday to detail its plans to address potential risks posed by cryptocurrencies calls for authorities to “ramp up enforcement where appropriate” and for Congress “to step up its efforts” to regulate the industry. The roadmap was published on an official government blog.

The failure of Terra’s algorithmic stablecoin UST, which sparked a wave of insolvencies, is one example of the critical setbacks that occurred in the cryptocurrency industry in the last year, which are mentioned at the beginning of the piece. It also brought attention to the failure of the FTX cryptocurrency exchange, which had been the third largest in the world at one point and caused consumers to lose billions of dollars.

“Thank goodness, turmoil in the cryptocurrency markets hasn’t hurt the wider financial system much yet,” the post said. It also noted that the Biden Administration is working to reduce the risks of cryptocurrencies and make sure they don’t hurt financial stability. The centre also stated that the Biden Administration is committed to ensuring that cryptocurrencies do not undermine financial stability.

“At the direction of President Biden, we have spent the last year assessing the dangers posed by cryptocurrencies and taking measures to reduce those dangers by making use of the authorities that are available to the Executive Branch.”

In addition, the post stated that “experts from throughout the administration have laid out the first-ever framework for producing digital assets in a secure, responsible manner while addressing the threats they bring.”

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It pointed out some of the most significant risk factors, such as the absence of applicable regulations, misleading statements, the failure to make adequate disclosures, and inadequate cybersecurity measures, which “allowed the Democratic People’s Republic of Korea to steal more than a billion dollars to fund its aggressive missile program.”

In addition, the administration demanded that all agencies make use of their executive powers to “ramp up enforcement wherever it is appropriate and issue new guidance when it is necessary.” In particular, the administration requested that Congress enhance the amount of work being put into the regulation of the cryptocurrency industry.

“Congress should enhance the authorities of regulators to prevent misuses of customers’ assets, which are harmful to investors and distort pricing, as well as to limit conflicts of interest,”

The administration noted that Congress should not allow mainstream institutions like pension funds to dabble in cryptocurrency markets because doing so would deepen the ties between cryptocurrencies and the more extensive financial system and increase the risks to the system as a whole. They referred to it as “a grave mistake” to pass laws that deepen the ties, and they noted that Congress should not allow this to occur.

The paper, which was authored by advisors to the White House named Brian Deese, Arati Prabhakar, Cecilia Rouse, and Jake Sullivan, came to the conclusion that the Biden Administration supports responsible technological innovations that make financial services cheaper, faster, safer, and more accessible while taking potential risks into consideration.

According to the report, in order to ensure that appropriate safeguards are implemented, the government “will continue to drive forward the digital-assets framework we’ve built, while working with Congress to achieve these goals.”