The White House of the United States launched this Friday (16) its first framework on the regulation of cryptocurrencies in the country. The guidelines, according to the authorities, aim to position the country as a leader in governance of the digital asset sector both locally and globally. Although the structure highlights the role of existing regulatory agencies, such as the US Securities and Exchange Commission (SEC) and the Commodity Futures Contracts Trading Commission (CFTC), there are still no specific determinations.
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US digital asset guidance
The guidance in question follows an executive order issued in March by Joe Biden. At the time, he ordered agencies to analyze the risks and benefits of digital assets. Then, these entities should issue reports with their opinions. Since then, the agencies have been studying this market with a focus on: investor protection; promoting financial stability; combating illicit use; US leadership in the global financial system; financial inclusion; and responsible innovation.
protecting investors
The nine-report framework encourages regulators such as the SEC and CFTC to “aggressively pursue investigations and enforcement actions against illegal practices in the digital asset space.” In addition, they emphasize the importance of redoubling efforts to monitor consumer complaints and punish unfair, misleading or abusive practices. In this context, the Financial Literacy Education Commission (FLEC) will be responsible for leading efforts with the public. That is, helping consumers understand the risks of digital assets, identify fraud and report misconduct.
Combating illicit use
With regard to actions to combat the illicit use of crypto assets, the framework notes that Biden will have to assess a possible amendment to the Bank Secrecy Act and other legislation to include digital asset service providers, such as NFT exchanges and platforms. In addition, Biden could pressure Congress to increase penalties for transmitting money without a license. The president is also considering amending federal statutes to allow the Department of Justice to prosecute cryptocurrency crimes in any jurisdiction where the victim is located. “The US will continue to monitor the development of the digital asset sector and its associated illicit financing risks, to identify any gaps in our legal, regulatory and supervisory regimes,” the document reads. Based on this, it will be up to the Treasury to complete an illicit financial risk assessment in decentralized finance by the end of February 2023 and an assessment of NFTs by July 2023.
digital dollar
On the eventual launch of a US central bank digital currency (CBDC), i.e. a digital dollar, the framework highlights that this asset would bring “significant benefits”. That’s because it would be a digital version of the US currency that is fully regulated and backed by the Federal Reserve. Of note, in the past, Fed Chair Jerome Powell said that a digital dollar would eliminate cryptocurrency use cases in the country. He cited, above all, the use of stablecoins, which are a headache for the US. Under the new framework, a US CBDC could make the payment system “more efficient”. After all, it would provide a basis for further technological innovation and facilitate international transactions. Furthermore, the digital dollar could promote consumer financial inclusion. On next steps, the administration has asked the Fed to continue its research on the US CBDC.
Stablecoin problem
The framework also takes time for stablecoins, which are perceived to be insecure. As the text highlights, to reverse this security issue, the Treasury “will work with financial institutions to strengthen their ability to identify and mitigate cyber vulnerabilities.” In this regard, it should share information and promote a wide range of datasets and analytical tools. The idea is for the agency to team up with others to “identify, track and analyze emerging strategic risks related to digital asset markets”. Also read: Yuga Labs would be working on a new collection of the Bored Apes universe, says source Also read: Post-Merge Centering? Data shows that two ETH addresses dominated 46% of nodes Read also: El Salvador companies ‘ignore’ Bitcoin in their technological innovation plans
