The Biden administration has posted an official blog detailing a road map to reduce the risk of cryptocurrencies.
The road map begins with mention of the 2022 LUNA/Terra explosion and the subsequent catastrophic contagion in the industry leading to various bankruptcies. Included in this reference to the bankruptcy of FTX, he said that, “Many everyday investors who trust cryptocurrency companies-including young people and people of color-suffered serious losses, but, thankfully, the turmoil in the cryptocurrency market has had little negative impact on the financial system that wider so far.
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 in the administration have created a framework for developing digital assets in a safe and responsible manner while addressing the risks they pose.
“At the direction of President Biden, we have spent the last year identifying the risks of cryptocurrencies and taking action to reduce the use of authority that the Executive Branch has,” the roadmap said.
It continues 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 adequate disclosures or commit outright fraud.
“Agencies use their authority to implement appropriate enforcement and provide new guidance as necessary,” the post read. “Banking agencies published joint guidance, just this month, on the importance of separating risky digital assets from the banking system. Agencies across the government have launched – or are currently developing – public awareness programs to help consumers understand the risks of buying cryptocurrencies.
However, this is not enough as it happened last year, according to the roadmap. Therefore, the Administration will open priorities for further research into digital assets and development, “which will help the technology that provides cryptocurrencies protect consumers by default.”
The post also details the Administration’s belief that Congress should step up its efforts by expanding regulatory powers, strengthening transparency and disclosure requirements, funding greater law enforcement capacity building and limiting cryptocurrency risks to the financial system. It is important to note that Congress should not give the green light to mainstream institutions like pension funds to dive into the cryptocurrency market as this would increase the relationship between cryptocurrencies and the wider financial system and increase systemic risk.
The latest roadmap for Bitcoin regulation is coming out of Washington, with the Biden Administration having released an “Executive Order to Ensure Responsible Development of Digital Assets,” in March 2022 and “Climate and Energy Implications of Crypto Assets in the United States. country,” reports on September 2022.