White House Calls for Tighter Cryptocurrency Regulations in New Report | Tarter Krinsky & Drogin LLP

In a follow-up to President Biden’s March 9 executive order, which required various federal agencies to issue official reports examining the risks and benefits of cryptocurrencies, the White House this week released a proposed framework for the development and regulation of digital assets. The framework outlines what crypto regulation should look like, how to fight fraud in the digital currency space, and how to harmonize borderless transactions.

In its series of reports released on September 15, 2022, the White House pointed to the volatility of cryptocurrency, as well as its recent impact on the market, fraud related to these digital assets, including money laundering and terrorist financing, and the environmental impact of digital currencies as reasons for the need further regulations for crypto assets.

recommendations

Although mandates have not yet been issued, the White House suggests considering and examining various regulations. The key points of the recommended regulations are:

  • Protection of consumers, investors and companies: Building on issued guidance and advanced enforcement resources, this framework requires increased efforts in oversight and regulation of digital assets to protect consumers and ensure fair gaming. This includes evaluating whether Congress needs to amend the Bank Secrecy Act, anti-tip-off laws, and unlicensed money transfer laws to explicitly apply them to digital assets, including digital asset exchanges and nonfungible tokens (NFT)- platforms. Additionally, the reports encourage regulators like the Securities and Exchange Commission to expand investigations into wrongdoing in the digital asset market and continue to take enforcement action against crypto companies, and encourage regulators like the Federal Trade Commission to redouble their investigative efforts to monitor consumer complaints and to enforce unfair and deceptive practices. The White House has also asked Congress to give regulators more specific guidance.
  • Exploring a Digital US Dollar: A US Federal Reserve Bank (CBDC) digital currency would be correlated to a digital form of a US dollar. The CBDC would be backed by the country’s central bank, where the Federal Reserve would have to pay you back. The establishment of a CBDC should ensure an efficient payment system, provide a basis for further technical innovations and enable faster cross-border transactions that are environmentally friendly. Creating a CBDC could eliminate the need for any cryptocurrency. However, prior to establishing a CBDC, further research is required from the Federal Reserve, the National Economic Council, the National Security Council, the Office of Science and Technology Policy, and the Treasury Department.
  • Financial Stability: Stablecoins, which are cryptocurrencies whose values ​​are tied to real-world assets like the US dollar, can be made more secure by the Treasury working with financial institutions to identify and mitigate cyber vulnerabilities through sharing information, and with the organization for Business Cooperation and Development and the Financial Stability Board.
  • Responsible innovation: The reports are urging various agencies, such as the Department of Energy and the Environmental Protection Agency, to look into tracking the environmental impact of digital assets and mitigating environmental damage, bearing in mind the large amount of electricity required to run crypto assets.

snack

These newly enacted regulations are likely to have global implications. While no immediate impact of these regulations is expected outside of cryptocurrency-related fraud enforcement, the creation of a potential CBDC and upcoming reports from various US agency regulators are expected to have a significant impact on cryptocurrency regulation and stability. We will continue to monitor all developments and will provide additional information as and when this happens.

[View source.]

Leave a Comment