Biden Administration Releases Roadmap To Mitigate Cryptocurrency Risks

The White House has unveiled a roadmap to reduce risks associated with the wider cryptocurrency industry.Author:BtcCaseyPublish date:Jan 27, 2023The White House has unveiled a roadmap to reduce risks associated with the wider cryptocurrency industry.The Biden Administration has posted an official blog detailing its roadmap to mitigate the risks of cryptocurrencies.The roadmap starts by citing the 2022 implosion of LUNA/Terra and the subsequent catastrophic contagion within the industry that led to various bankruptcies. This reference includes the bankruptcy of FTX. It states that “many everyday investors who trusted crypto companies–including young people, people of color–suffered severe losses but, thankfully turmoil in cryptocurrency markets has not had a negative impact on the broader economic system to date.” According to the roadmap, the Administration’s main focus is to ensure that cryptocurrencies do not threaten financial stability, protect investors, and hold bad actors accountable. The roadmap states that experts from all levels of the Administration have created a framework to develop digital assets in a responsible and safe manner while addressing the potential risks. The roadmap states that “under President Biden’s direction we have spent the last year identifying the risks associated with cryptocurrencies and taking action to mitigate them using the authority that the Executive Branch has.” It also describes how many cryptocurrency entities ignore financial regulations. It is also alleged that promoters and cryptocurrency platforms often mislead consumers, have conflicts-of-interest, fail to disclose enough information, or commit fraud. The post states that agencies are using their authority to increase enforcement and issue new guidance when necessary. “Just this month, the banking agencies issued joint guidance on the imperative to seperate risky digital assets and the banking system. All government agencies have launched or are currently developing public-awareness programs that help consumers understand the risks associated with buying cryptocurrencies. The roadmap states that this is not enough considering the events of the past year. According to the roadmap, the Administration will identify priorities for further research on digital assets and development. This will “help the technologies that power cryptocurrencies protect consumers by default.” The Administration’s belief is that Congress must increase its regulatory powers, strengthen transparency and disclosure requirements, fund greater law-enforcement capacity, and limit cryptocurrencies’ risk to the financial system. It is important to note that Congress should not allow mainstream institutions such as pension funds to enter cryptocurrency markets. This would increase systemic risk and deepen the ties between cryptocurrencies, the wider financial system, and increase the risks. The roadmap is the latest in regards to Bitcoin regulation out of Washington, with the Biden Administration having released the “Executive Order on Ensuring 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.Tagsterms:Biden AdministrationWashingtonRegulationUnited States