The Biden Administration has published an official blog detailing its roadmap for mitigating cryptocurrency risks.
the road map it begins by citing the LUNA/Terra implosion in 2022 and the subsequent catastrophic contagion within the industry that led to several bankruptcies. Included in this reference is the bankruptcy of FTX, which says that “many everyday investors who put their trust in cryptocurrency companies, including young people and people of color, suffered serious losses, but fortunately, the turmoil in the cryptocurrency markets has had little negative impact on the broader financial system to date.
According to the roadmap, the Administration’s focus is to ensure that cryptocurrencies cannot undermine financial stability, protect investors, and hold bad actors accountable. To achieve this, the roadmap states that experts from across the administration have established a framework for developing digital assets safely and responsibly while addressing the risks they pose.
“Under the direction of President Biden, we have spent the last year identifying cryptocurrency risks and acting to mitigate them using the powers that the Executive Branch has,” the roadmap reads.
He goes on to describe how some cryptocurrency entities ignore financial regulations and risk practices. It is also alleged that cryptocurrency platforms and promoters often mislead consumers, have conflicts of interest, fail to make proper disclosures, or commit outright fraud.
“Agencies are using their authorities to increase enforcement where appropriate and issue new guidance where necessary,” the post read. “Banking agencies issued joint guidance, just this month, on the imperative to separate risky digital assets from the banking system. Government agencies have launched, or are developing, public awareness programs to help consumers understand the risks of buying cryptocurrency.”
This, however, is not enough given the events of the last year, according to the roadmap. Therefore, the Administration will reveal priorities for further dedicated digital asset research and development, “which will help the technologies that power cryptocurrency protect consumers by default.”
The publication also details the administrations’ belief that Congress should step up efforts by expanding the powers of regulators, strengthening transparency and disclosure requirements, funding greater law enforcement capacity building, and limiting the risks of cryptocurrencies for the financial system. It is important to note that Congress should not give major institutions such as pension funds the green light to dive headfirst into cryptocurrency markets, as this would deepen the ties between cryptocurrencies and the broader financial system and would increase systemic risks.
The roadmap is the latest when it comes to Bitcoin regulation outside of Washington, with the Biden Administration having published the “Executive Order to Guarantee the Responsible Development of Digital Assets”, in March 2022 and the “Climate and Energy Implications of Crypto Assets in the United States”, report in September 2022 respectively.
