With each passing day, it becomes more likely that centralized entities will regulate the decentralized crypto industry. The White House is taking a hard stance on crypto companies. The Biden Administration has proposed new rules to regulate the burgeoning market and urges regulators to aggressively pursue those who break the law.
The White House has released its first framework on what crypto regulation in the U.S. should look like under the Biden administration. This framework suggests ways that would make borderless digital transactions simpler and easier to track. It also provides methods of reducing fraudulent activity associated with digital assets.
White House releases its first ever crypto regulation framework
The new White House orders rely on the strength of existing watchdogs like the Securities and Exchange Commission and Commodity Futures Trading Commission. However, no specific organ is running the show as of now.
In addition, the long-awaited policy has caught the attention of both the crypto industry and investors in this early asset class. The industry didn’t take kindly to the document, as it is all too evident that policymakers prioritize security and enforcement over everything else.
The framework follows an executive order issued in March by President Joe Biden, which called on federal agencies to examine the risks and benefits of cryptocurrencies and issue official reports on their findings.
Digital assets present potential opportunities to reinforce U.S. leadership in the global financial system and remain at the technological frontier […] But they also pose real risks as evidenced by recent events in crypto markets. The May crash of a so-called stablecoin and the subsequent wave of insolvencies wiped out over $600bn of investor and consumer funds.
White House Statement
The news was not unexpected, and bitcoin and ethereum tumbled by about 10%, suggesting that the cryptocurrency slump is far from over. On Monday, bitcoin fell below $19,000, a stark contrast to its all-time high of $69,000 in November. The Federal Reserve’s rate increase yesterday added to the decline.
Brian Deese, director of the National Economic Council, and national security advisor Jake Sullivan said in a statement that the new guidelines are meant to make sure that America is a leader in the digital assets ecosystem, both at home and abroad.
Important takeaways from the White House’s crypto framework
The new regulations seek to achieve six distinct aims: to improve consumer and investor protection, promote financial stability, combat illicit finance, enhance U.S. leadership in the global financial system and economic competitiveness, expand financial inclusion, and safeguard responsible innovation.
The White House stated that the new crypto rules would protect customers and investors by preventing sellers from misinforming buyers about the dangers of trading with digital assets and ensuring they follow existing laws.
The section of the White House’s new framework on crypto regulation that stands out focuses on eliminating illegal activity in the industry — and the proposed measures appear to have a real bite.
The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and non-fungible token (NFT) platforms.
The White House fact sheet
.Within the digital asset sector, crime is common. In only the beginning of 2021, over one billion dollars in crypto has been lost to fraudulence, according to research from the Federal Trade Commission.
The administration also urged the Securities and Exchange Commission (SEC) and Commodity Future Trading Commission (CFTC) to “aggressively pursue investigations and enforcement actions against unlawful practices in the digital assets space.”
The U.S. SEC and the CFTC have been in a power struggle over which regulator should regulate the crypto sector. That being said, the White House has likewise encouraged agencies to issue policies and regulations to address current and emerging digital asset risks.
The crypto framework takes an interest in the CBDC
The most essential portion of the White House framework is devoted to central bank digital currencies (CBDCs). It revealed that the administration has already established policy goals for a U.S. CBDC system and will present them to Congress in writing. However, further study on the technological foundation of that system is required.
The White House’s new framework points to the fact that a U.S. CBDC could enable a more efficient payment system provides a foundation for further technological innovation, facilitates faster cross-border transactions, and is environmentally sustainable.
The report stated that the CBDC could help with financial inclusion and equity by allowing access to a broad set of consumers. To that end, the administration urges the Fed to continue its research, experimentation, and evaluation of a CBDC.
The Office of Science and Technology Policy submitted a report analyzing 18 designs for central bank digital currencies that could be used in the U.S. The report looked at the choices across six categories: who can use it, how it is governed, how secure it is, how transactions are carried out, what data is collected, and how the system can be adjusted.