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September 16, 2022

White House Releases Crypto Regulation Framework

Based on a previous executive order from President Biden, the White House has developed a framework for regulating crypto.

The framework, a collaborative effort by many government authorities, provides various ideas for regulating cryptocurrencies, combating crypto fraud, and standardizing the financial services sector.

Brian Deese, director of the National Economic Council, and Jake Sullivan, national security advisor, said in a joint statement that the rules will make the United States a worldwide leader in regulating digital assets, according to CNBC.

The framework outlines the potential of a Digital Dollar central bank digital currency (CBDC) initiative.

According to the paper, this invention might produce a more efficient payment system and pave the way for future technological advancements, among other advantages.

According to the framework, the CBDC “may enhance financial inclusion and fairness by facilitating access for a wide range of consumers.”

The framework voiced worry over digital assets and how they are interwoven with the conventional financial system, which might result in economic instability due to contagion.

The framework described how the collapse of Terra’s ecosystem illustrated how the sector may have an effect on the larger financial system.

According to the research, stablecoins should be subject to tighter laws, and the U.S. Treasury must “engage with financial institutions to strengthen their ability to detect and address cyber risks.”

The framework also outlined how harmful actors utilize crypto for criminal actions and the need of eradicating this behavior. In addition,

“Digital assets have aided the emergence of ransomware hackers, the selling of drugs and laundering of money by drug trafficking groups, and the financing of the actions of rogue regimes.”

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Based on the framework:

“The President will determine whether to request that Congress alter the Bank Secrecy Act, anti-tip-off regulations, and laws against unlicensed money transmission so that they apply specifically to digital asset service providers, including digital asset exchanges and non-fungible token (NFT) platforms.”

A Treasury Department assessment also urged the need for more crypto industry rules.

Secretary of the Treasury Janet Yellen stated:

“The papers and their recommendations offer a solid framework for policymakers as we endeavor to maximize the potential advantages of digital assets while mitigating and minimizing the associated dangers.”